This article was originally published 23 May 2018, and updated 20 June 2022.
As we approach 30 June, it is a good time to review your superannuation contributions and decide whether making additional superannuation contributions fits with your investment strategy and allowable limits.
Making further contributions to superannuation can be a tax-effective strategy that boosts your funds for retirement. However, you don’t have to be approaching retirement to be thinking about your superannuation balance. Making additional contributions from early on in your career can have a significant impact due to the effects of compounding returns.
Concessional contributions
Concessional contributions are made with before-tax money (such as employer superannuation guarantee contributions and salary sacrificing). The annual concessional contribution limit for the 2022 financial year is $27,500, regardless of your age. However, under current rules, if you are aged 67 years or over, you will need to satisfy a work test before contributing to super.
As of 1 July 2017, anyone who is eligible to contribute to superannuation will now be able to claim a tax deduction for their personal superannuation contributions. This involves making a superannuation contribution with your after-tax surplus income. The contribution will be recorded as a non-concessional contribution until the superannuation fund receives a signed ‘Notice of Intention to Claim a Tax Deduction’ Form. The superannuation fund will then issue confirmation that the contribution has been recorded as a concessional contribution and can be claimed as a tax deduction. It is therefore important not to lodge your tax return or roll funds out of your superannuation fund prior to receiving confirmation that your ‘Notice of Intention to Claim a Tax Deduction’ Form has been lodged successfully.
Since 1 July 2018, individuals with a total superannuation balance of less than $500,000 have been able to carry forward their unused concessional cap space amounts. This enables people to make ‘catch-up’ superannuation contributions.
Individuals will be able to access their unused concessional contributions cap space on a rolling basis for a period of five years. Amounts that have not been used after five years will expire.
Tip: Be aware of how much you have already contributed for the financial year. Exceeding contribution caps can result in additional tax payable.
Non-concessional Contributions
Non-concessional contributions are made with after-tax money. The annual non-concessional contributions (NCC) cap is $110,000 and is only eligible to you if your superannuation balance is less than $1.7 million on 30 June of the preceding financial year. The below table outlines the contribution cap and ‘bring forward’ availability based on your age and account balance.
| Non-concessional (after-tax) contributions | |
| Under age 67 | $110,000 up to $330,000 (subject to ‘bring forward’ availability) |
| Age 67 < 75 | $110,000 |
| ‘Bring forward’ availability | |
| <$1.48 million account balance | Access to $330,000 cap (over 3 years) |
| $1.48m < $1.59m account balance | Access to $220,000 cap (over 2 years) |
| $1.59m < $1.7m account balance | Access to $110,000 cap (over 1 year) |
| ≥$1.7 million account balance | Nil |
Tip: Don’t leave contributions to the last minute. Many superannuation funds have cut off dates where the contribution needs to be initiated several days before 30 June.
Contribution splitting and spouse contributions
Contribution splitting allows you to split concessional contributions with your spouse, provided both of your superannuation funds permit this and you meet all necessary requirements (such as age and workforce status). This can only be done after the end of the financial year and it is important that any intention to claim a deduction notice is submitted to the fund and confirmed before the contribution is split. Often this can be done on the same paper work. The maximum amount able to be transferred is 85% of your concessional contribution (100% - 15% contribution tax).
It may also be advantageous to make contributions on behalf of your spouse. For example, you may be eligible to claim a tax offset of up to $540, where an after-tax contribution is made of at least $3,000 and the receiving spouse’s total income does not exceed $40,000.
With the end of the financial year fast approaching, please contact a BDO adviser if you would like to discuss your situation.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings, etc., as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances.
The financial product advice or information in this document is of general nature only and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser, whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.