Move carefully on super highway to avoid a speeding ticket

THE Tax Office recently released statistics about excess super contribution assessments for the 2008 and 2009 financial years. There were 33,642 excess concessional contributions assessments and only 4108 non-concessional contributions assessments issued.

Despite this disparity, the excess contributions tax was almost the same for both types of breaches, with more than $345 million collected for both years.

With concessional contribution limits being halved in 2010, it will be interesting to see the statistics for that year.

QI am 52 and my wife is 44 and we each earn a gross salary of $100,000. In addition to the compulsory $9000 our employer contributes, we both want to contribute an additional $30,000 to superannuation. What is the most tax-effective way to do this?

AAs you are over 50, you have a concessional contribution limit for the 2012 year of $50,000. This means the extra $21,000 can be made as a salary-sacrifice contribution. Your wife will only be able to contribute $16,000 in salary sacrifice due to the lower limit of $25,000 applying to her. If the upper limit is not increased you too will be limited to contributing $16,000 as salary sacrifice from July 1 next year. The extra super contribution of $14,000 for your wife in the 2012 financial year, and possibly the $28,000 for you both from next July 1, will need to be made as non-concessional contributions.

Unfortunately, because non-concessional contributions are made after tax, about $24,000 of your wife's pre-tax salary will be needed to fund the $16,000. This means $48,000 of your combined pre-tax salary could be required to fund your desired contributions from July 1.

QMy wife and I are both retired. I am 62 and my wife 60. I have an allocated pension with a super fund that has been struggling since the crash. I draw $4000 a month from this fund, which now has a balance of $269,000. We now have access to $150,000 from an investment. Do you think we should put that into my allocated pension, or another fund? Also, would it be better in my name or my wife's? Would there be any possibility of help from Centrelink?

AThe first thing you should consider is whether your super fund's performance is affected by high administration costs and poor investment decisions. If so, you should consider a new super fund.

You should be eligible for at least a low-income health card from Centrelink. To maximise your eligibility for the age pension when you turn 65, the contribution should be made as a non-concessional contribution for your wife. This is because the value of extra superannuation will not be counted as an asset for Centrelink purposes for your wife until she turns 65.

Q Can you roll over your allocated pension from one super fund company to another, even though you are past 65 and no longer working? If so, what is the process?

A The restriction on contributing to a superannuation fund once a person turns 65 does not apply to money already in superannuation. To roll over to another fund you should first join the new fund and it should be able to help you with the rollover process.

Questions can be emailed to super@taxbiz.com.au