There are many different ways to top up your super, but if you want to take advantage of the opportunity to maximise your contributions, it is important not to wait until the last minute.
One of the simplest ways to boost your retirement savings is to contribute a bit extra into your super account from your before-tax income. When you make a voluntary personal contribution, you may even be able to claim it as a tax deduction.
If you have any unused concessional contribution amounts from previous financial years and your super balance is less than $500,000, you can also make a carry-forward contribution. This can be a great way to offset your income if you have higher-than-usual earnings this year.
An alternative easy way to boost your super is by making tax-effective super contributions through a salary sacrifice arrangement. Now is a good time to discuss this with your boss, because the Australian Taxation Office requires these arrangements to be documented before commencement.
Non-concessional super strategies
Non-concessional super contributions are payments you put into your super from your savings or from the income you have already paid tax on. They are not taxed when they are received by your super fund.
Although you can’t claim a tax deduction for non-concessional contributions because they aren’t taxed when entering your super account, they can be a great way to get money into the lower-taxed super system.
Downsizer contributions are another option if you’re aged 55 and over and plan to sell your home. The rules allow you to contribute up to $300,000 ($600,000 for a couple) from your sale proceeds.
And don’t forget you can contribute to your low-income spouse’s super account – it could score you a tax offset of up to $540.
Eligible low-income earners also benefit from the government’s super co-contribution rules. The government will pay 50 cents for every dollar you pay into your super up to a maximum of $500.
Your tax bill can benefit
Concessional contributions are taxed at only 15 per cent, which for most people is lower than their marginal tax rate. You benefit by paying less tax compared to receiving the money as normal income.
If you earn over $250,000, however, you may be required to pay additional tax under the Division 293 tax rules.
Watch your annual contribution limit
For concessional contributions, the current annual cap is $27,500 and this applies to everyone.
When it comes to non-concessional contributions, for most people under age 75 the annual limit is $110,000. Your personal cap may be different, particularly if you already have a large amount in super, so it’s a good idea to talk to us before contributing.
There may even be an opportunity to bring forward up to three years of your non-concessional caps so you can contribute up to $330,000 before 30 June.