Boost Your Super Before 30 June: What You Need to Know
With the financial year drawing to a close, there’s still time to consider ways to grow your superannuation balance. Even a small contribution before 30 June can significantly enhance your retirement savings over time, thanks to the power of compounding.
Here are five key strategies to consider—subject to eligibility and contribution limits:
1. Concessional (Before-Tax) Contributions
You can contribute up to $30,000 in concessional (pre-tax) contributions per financial year. This includes your employer’s Superannuation Guarantee contributions and any voluntary pre-tax contributions you make.
These contributions are taxed at 15%, potentially lower than your marginal tax rate. If you haven’t reached the cap, consider contributing more via salary sacrifice or direct deposit (using after-tax income and then claiming a tax deduction). To claim a deduction, submit a notice to your super fund and receive acknowledgment before lodging your tax return.
Be aware of fund processing cut-offs—many super funds set a deadline in mid-June. Exceeding the $30,000 cap may result in additional tax, so be sure to tally all contributions, including those from your employer.
2. Carry-Forward (Catch-Up) Contributions
If your super balance was under $500,000 on 30 June of the previous year and you haven’t fully used your concessional cap in past years, you may carry forward unused amounts for up to five years. For instance, if you contributed $15,000 in 2019–20 (when the cap was $25,000), you could carry forward the $10,000 unused portion and contribute up to $40,000 this year.
Check your carry-forward balance through the ATO’s online services via myGov.
3. Non-Concessional (After-Tax) Contributions
These contributions are made from after-tax income and are not tax-deductible. The current cap is $120,000 per year. However, under the “three-year bring-forward rule,” you may contribute up to $360,000 in one year and forgo further non-concessional contributions for the next two years.
If contributing more than $360,000, consider maximizing your $120,000 cap before 30 June, then using the bring-forward rule from 1 July to contribute more. Seek advice, as rules vary depending on your circumstances.
4. Home Downsizer Contributions
If you’re 55 or older, you may contribute up to $300,000 from the sale of your principal residence—$600,000 for couples—into your super, outside of the regular contribution caps. Your home must have been owned for at least 10 years and must meet ATO criteria (not a caravan or houseboat). The contribution must be made within 90 days of settlement, though extensions may apply.
5. Spouse Contributions
You can either:
Split your concessional contributions to your spouse’s super after year-end (if they’re under 65 and not retired), or
Make a non-concessional contribution directly to their super, possibly qualifying for a tax offset.
Ensure your fund allows contribution splitting and refer to ATO guidelines for forms and eligibility.
Consider Professional Advice
Superannuation rules are complex, with age-based and contribution-specific caps. Exceeding limits can result in tax penalties. A licensed financial adviser can help tailor the best strategy for your goals.
Rick Maggi, Financial Advisor Perth, Westmount Financial