Non-concessional contributions to superannuation are contributions that are made from your income after tax. In the 2013-14 financial year the cap on non-concessional super contributions was $150 000, with contributions exceeding this being taxed at 46.5%. As non-concessional contributions to super have already been taxed this meant that contributions exceeding the cap were potentially being taxed at 93%.
Many Australians over the age of 60 were making substantial contributions to their super in order to take advantage of the tax breaks and accidentally exceed the cap.
In the 2014-2015 financial year, the cap on non-concessional super contributions will be raised to $180 000. The government has also announced that it will lift the non-concessional contributions tax. Individuals may withdraw their excess contributions, along with any earnings, and have these taxed at their usual marginal tax rate. This will apply to excess contributions made after 1 July 2013.
Further details of the plan have not yet been decided, as the government is consulting with the superannuation industry.