To find a financial term, click on the first letter of the word or phrase then scroll down the alphabetic list of definitions. If you need to return to this alphabet list quickly for another selection then click on the top button to the right of each page.

ADF
Approved Deposit Fund. This is a fund that accepts eligible termination payments after you take early retirement, change jobs or are retrenched. Contributions cannot be made directly to an ADF.

After-tax contributions
Contributions you make with after-tax money, such as your take-home pay. These are also called "non-concessional", "personal" or "undeducted" contributions.

Account Based Pension
A superannuation investment that provides regular, flexible and tax-effective income when you retire.

Annuity
A series of regular payments (fortnightly, monthly or yearly), usually purchased with a lump sum from a life insurance company.

Before-tax Contributions
Contributions to super that are made before tax is taken out of your wage. These can be made by employers for superannuation guarantee and also include salary sacrifice contributions. Contributions made by the self-employed, for which they can claim a tax deduction are also included. May also be called "concessional", "taxable" or "deducted" contributions.

Benefits
The amount you are paid as a superannuation income stream, lump sum or a combination.

Benefits Tax
This is the tax paid on benefits taken from superannuation, either by way of a lump sum or a pension. From 1 July 2007, if you are aged 60 or over, benefits you receive from a 'taxed source' will be tax free and not subject to this tax.

Complying Superannuation Fund
A superannuation fund that receives concessional tax treatment.

Concessional Contributions
Contributions to super that are made before tax is taken out of your wage. Includes superannuation guarantee contributions made by employers, salary sacrifice contributions and contributions by the self-employed, for which they can claim a tax deduction. These contributions are taxed at a lower "concessional" rate of 15% which is often referred to as 'contributions tax'.

Concessional Contributions Cap
From 1 July 2007 there will be a limit on concessional contributions of $50,000 (indexed) a year. For people 50 or over, there will be a transitional limit of $100,000, (not indexed) but only until 30 June 2012. Contributions in excess of the limit will be subject to the excess concessional contributions tax.

Contributions Tax
The 15% tax payable on some amounts paid into a superannuation fund and the earnings and investments held in the fund. Your super fund usually reduces your superannuation account by your share of this tax.

Deducted Contributions
Superannuation contributions which you (if you are self-employed) or your employer claim as an income tax deduction.

Defined Benefit Fund or Scheme
Fund where a member's benefit does not depend solely on contributions and earnings, but on other factors such as years of service and average salary.

Dependants
People who need your financial or domestic support. These can include a spouse, a de facto, a child, or a person who is in your care.

Employment Termination Payment
A lump sum payment made to you when your employment is terminated. These payments must be made within 12 months of termination, and usually receive concessional income tax treatment.

Employer Contributions
Payments made by your employer (or someone associated with your employer) to your super fund. These can include superannuation guarantee obligations, plus any salary sacrifice amounts.

Excess Concessional Contributions
Before-tax contributions to your super fund which go over a yearly cap. This is $50,000 a year (indexed) for most people. If you're over 50 between 1 July 2007 and 30 June 2012, the cap is $100,000.

Excess Non-concessional Contributions
After-tax contributions to your super fund which go over a cap of $150,000 a year. Excess concessional contributions (see above) are also counted towards this limit.

Excess Concessional Contributions Tax
A tax of 31.5% on your contributions over the cap. You are personally liable for this tax, and you can ask your super fund to release money to pay it.

Excess Non-concessional Contributions Tax
A tax of 46.5% on your contributions over the cap. You are personally liable for this tax, and you must ask your super fund to release an amount of money equal to the tax.

Funded Defined Benefit Fund
A fund that receives employer contributions, usually annually. These contributions are not allocated to any individual members, but are combined in the fund. Personal contributions may also be made to these funds.

Member Contributions
Personal contributions to a superannuation fund. These can be undeducted personal contributions or deductible personal contributions.

Non-concessional Contributions
These are amounts that count toward your non-concessional contributions cap, i.e. personal contributions which are not claimed as an income tax deduction. These include contributions made by your spouse to your superannuation account.

Non-concessional Contributions Cap
From 1 July 2007, non-concessional contributions made to super will be capped at $150,000, or $450,000 over a three-year period.

Notional Taxed Contributions
Since contributions into defined benefit funds are not always linked to individual members, a 'notional' amount will be calculated to determine if you have gone over the cap for that year.

Personal Contributions
Contributions you make to your superannuation account including from money you have paid tax on, such as your take-home pay and contributions which you don't claim a tax deduction for.

Preservation Age
The age when you can access your superannuation benefits. Preservation age will rise from 55 to 60 between 2015 and 2024. This will mean that for someone born before 1 July 1960, their preservation age is 55 years, while for someone born after 30 June 1964, their preservation age will be 60.

Reversionary Income Stream
An income stream which, on your death, continues to be paid to your nominated beneficiary.

Salary Sacrifice Contributions
When you arrange for your employer to put a part of your before-tax salary into your superannuation account for you. These contributions count toward your concessional contributions cap.

Superannuation Benefit
The amount you are paid either as a superannuation income stream, lump sum or a combination.

Superannuation Income Stream
A regular series of payments from a superannuation fund.

Super Co-contribution
A payment made by the government into your super fund. The government pays $1.50 for every $1 you make in personal contributions for which you have not claimed a tax deduction, up to a maximum of $1,500. The payment reduces by 5 cents for every dollar you earn over $28,000.

Superannuation Guarantee (SG) Contributions
The before-tax minimum level of superannuation contributions that an employer must contribute for eligible employees. The rate is currently 9%.

Taxable Contributions
Contributions to a superannuation fund that are subject to the 15% 'contributions tax'. These are generally 'concessional contributions' including employer contributions and salary sacrifice contributions.

Taxed Source
A 'taxed source' is generally a super fund where tax is paid on contributions and earnings. Most people have their superannuation accounts in taxed funds.

Tax File Number (TFN)
The unique identifying number issued to you by the Tax Office.

Transitional Concessional Contributions Cap
If you are aged 50 or over between 1/7/2007 and 30/6/2012, you or your employer can make concessional contributions of up to $100,000 a year.

Transitional Non-concessional Contributions Cap
Between 10 May 2006 and 30 June 2007 you can make up to $1 million in non-concessional contributions without being liable for excess non-concessional contributions tax. Employer contributions above your aged-based deduction limit will also count towards this cap.

Transition to Retirement
Since 1 July 2005, people who have reached their preservation age can withdraw part of their superannuation benefits as an income stream while they are still working. This income stream can be no more than 10% of their superannuation account balance per year.

Unfunded Defined Benefit Fund
A fund in which member benefits are not financed until just before they become payable to the member. At this time the benefits are generally sourced from the employer of the member. These funds mostly apply only to government employees.

Undeducted Contributions
Money you have contributed to superannuation for which a tax deduction has not been claimed.

Untaxed Source
An "untaxed" source is typically a government fund for public servants. As amounts have not been accumulating in a fund, contributions and earnings taxes have not been paid.

Work Test
A test that requires a person to have worked at least 40 hours within 30 consecutive days in a financial year. People who are aged between 65 and 74 must meet the work test to be allowed to make personal superannuation contributions.

Websites

Super Information: ATO

Calculators: ATO; ASIC

© 2008 Prime Time Financial Counsellors Pty Ltd unless otherwise stated.