Remembering the end goal of retiring with the home paid off and as much as possible in the tax free super environment, it is a generally a good idea to put as much as you can into super every year.

There are two types of contribution available each year; concessional (which includes employer SGC and salary sacrifice) capped at $27,500 pa; and non-concessional (made from your after tax funds) capped at $110,000 pa.

There are various restrictions on making these contributions which are dependent on your age, whether you are working and how much you have in super already. You also need to consider your taxable income to decide if this is the best option for you. Therefore it is a good idea to please call us to discuss your options BEFORE you do anything!

What makes this more confusing is that both contribution types have the ability to use caps from other years. However to keep you on your toes, one looks backwards and the other looks forwards! You need to do them in the right order to maximise your benefits. I will outline them both in simple terms below, but you need to check your individual circumstances with us in detail first before acting.

LOOK BACK FIRST

Looking at concessional contributions first – you can utilise the unused amounts of the $27,500 caps ($25,000 in earlier years) for the past 5 years, with the first year available being 2018/19. After 5 years the caps are no longer available – i.e. you have 2023/24 to use the earliest available caps from 2018/19. This is the last year to make use of the 2018/19 cap.

The major stumbling block for many is that you can only do this if the sum of all your superfund balances is less than $500k on the 30 June of the prior year. That is why you need to consider this option first. If your balance is over $500k you still top up the current year cap to $27,500.

Your unused caps are available on mygov – HOWEVER they do not include all contributions for the 2023/24 year as these are not reported until July, and they do not include contributions paid into SMSFs for the 2024 year at all. So you need to be careful when calculating how much extra you could put in.

You need to get your superfund statement for the current year and add up the contributions made to date then check with your employer if your June quarterly super will be paid in June or July this year.

Once you have calculated how much to top up your super by using this method, you use the personal contribution BPAY codes to make the payment, fill in an intention to claim a tax deduction form and send it to your superfund. This enables you to claim a tax deduction for the amount put in. Useful if your taxable income is expected to be over $30k. Contributions must clear the fund before 30th June. You must complete the deduction form BEFORE you roll your super balance elsewhere or commence a pension.

THEN LOOK FORWARD

If you have lots of spare cash sloshing around, you can put $110k pa of non-concessional contributions into your fund each year. (Increases to $120k from 1 July 24). These are not taxed on entering the fund. You can also bring forward 2 years of non-concessional caps, put $330k in before 30th June and then no further non-concessionals for the next two years.

Note there are restrictions if your superfund balance is already over $1.68m and you need to be under age 75.

You can see how if you enthusiastically do this option first, you run the risk of having a super balance of over $500k and missing out on being able to claw back those unused concessional caps.

As ever – please check before acting!

Lindsay 0413 952180