There are a few changes to super contributions that start this tax year. The first I will look at here is the change to concessional contributions
Whatever your super balance, as long as you are under age 65 (or if between 65 and 75 you pass the work test), you can contribute the full amount of concessional contributions each year. The $1.6m balance cap does not apply to concessional contributions, only to non-concessional contributions.
The concessional contributions cap has been reduced to $25k pa per person, so it is essential to try to utilise these caps whenever possible to maximise your future pension.
Traditionally, for those who are employed, the contribution cap is utilised by a combination of 9.5% SGC and salary sacrifice contributions. However not every employer offers the salary sacrifice facility (especially those based overseas), and some employees have lost out in the past.
However from July 2017, super contributions can be claimed as a tax deduction by everyone with taxable income, rather than having to be salary sacrificed. The (slightly odd) rule, where this was only possible if employment income was less than 10% of total income, has gone.
This gives employees a great chance to top up their super contributions to $25k where salary sacrifice is not available. Remember that the contribution must have cleared the fund by 30 June, and the various election paperwork be in place before the tax return is lodged for this to work.
It also gives a helpful option, for those who are a tad unorganised, and perhaps forgot to set up their salary sacrifice. You now have the option to contribute in a different way.
Salary sacrifice should still be first option as it is automated, stopping you spending instead of saving. So dull, but so essential! Oh and there is less paperwork, which has to be a good thing.
Please get in touch if you need assistance.
Lindsay 0413 952 180