Reduction in contributions to prevent them exceeding concessional contributions cap
220B Reduction in contributions to prevent them exceeding concessional contributions cap
Subsection (2) applies if the total of the following (the pre-agreement contributions) would, but for subsection (2), be more than an employee’s concessional contributions cap for a financial year—
the yearly contribution by the employee’s employer made under section 220(2) to the relevant fund for the employee;
the yearly contribution by the employee made under section 220A to the relevant fund for the employee.
The employer and employee may agree in writing—
to reduce the pre-agreement contributions to the amount equal to the employee’s concessional contributions cap for the financial year; and
if a yearly contribution made under section 220A(5) is part of the pre-agreement contributions—on the extent, if any, to which a contribution mentioned in subsection (1)(a) or (b) will be reduced to achieve the reduction.
If the pre-agreement contributions are reduced under subsection (2)—
the amount of the reduction must be paid by the employer to the employee as salary; and
no contribution is payable under section 220(2) by the employer because of salary paid under paragraph (a); and
no contribution is payable under section 220A by the employee because of salary paid under paragraph (a) other than to the extent, if any, to which the salary amount relates to a reduction of a yearly contribution under section 220A(5).
In this section—
concessional contributions cap, for an employee, means the employee’s concessional contributions cap within the meaning of the Income Tax Assessment Act 1997 (Cwlth), section 292-20(2), subject to the Income Tax (Transitional Provisions) Act 1997 (Cwlth) section 292-20(2).
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