I'm getting a bit confused about how this works even after reading the ATO website.
https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Super-contributions---too-much-can-mean-extra-tax/?page=4#Ifyoudontwithdrawyourexcessconcessionalc
They provide heaps of examples where people have over $1.6 million in their super with warnings about you possibly getting taxed 95% on the extra contributions. But nothing about what happens if you have less than $1.6 million in super.
My situation
- Super total value less than $350k
- Paid $30.5k in employer and Voluntary Before-Tax Contribution (excess of about $3k over $27.5k cap)
- Wage in the top tax bracket
From what I gather from reading my previous tax return the excess ($3k that year) they just added to my taxable income and then adjusted my owed tax. So I'm guessing I paid the top tax bracket of 45% on that extra.
I have the option to release 85% of this excess based on the above link. From what I can tell it's mainly to help people pay the additional tax they incur or for people with more than $1.6 million in their super wanting to avoid a huge tax hit on the extra.
Am I paying less tax by leaving it where it is in super or releasing the 85% back to myself?
There’s an added complication that might work in your favour - you can ‘back pay’ super to 5 years. So if you haven’t used up your $27.5k cap last year, you can carry over the unused portion to this year.
Thanks for the response. Pretty sure my accountant already did this so I'm not elligible for that. Will double check the next tax return though.
the amounts are visible on mygov or via your accountant if you like paying extra fees.