Date of article: November 2006
Last updated: N/A

Personal contribution cap - transitional arrangement clarified

• Up to $1 million of post-tax contribution can be made between 10 May 2006 and 30 June 2007.
• Ability to withdraw without penalty post-tax contribution in excess of $1 million.

In the plan to simplify and streamline superannuation, there is a $1 million transitional cap for post-tax contributions made between 10 May 2006 and 30 June 2007. This transitional cap is available to all individuals who are eligible to contribute to superannuation. Contributions in excess of this amount may be subject to penalty.

Those people who have made post-tax contributions above $1 million since 10 May 2006 will be able to withdraw without penalty the excess post-tax contributions that were made before 7 December 2006 or in limited circumstances seek the Commission of Taxation's discretion to reallocate excess post-tax contribution made since 10 May 2006 to a different income year. An application will need to be made to the Australian Taxation Office before 30 June 2007. If you do not make the application before 30 June 2007, you will be liable for tax at the rate of 46.5% for the contributions in excess of $1 million.

If you contributed more than $1 million post-tax contributions in the period 10 May 2006 to 30 June 2007, and the excess over $1 million was contributed after 6 December 2007, you will be liable for tax at the rate of 46.5% for the contributions in excess of $1 million.