30th June 2019 is approaching us and it is now time to start thinking about making the most of financial year-end Super contributions.
Superannuation is your money and a long-term investment; the money you put aside now can make a significant difference to your retirement.
Understanding the rules around making Super contributions can help you boost your Super and potentially create some tax advantages.
Concessional Contributions include compulsory employer contributions that your employer makes on your behalf and any salary sacrifice arrangements. Also included are any voluntary personal contributions for which an individual has claimed a tax deduction. Depending on their total assessable income, deducted contributions can reduce tax payable in their personal tax return.
Non-Concessional Contributions are voluntary personal contributions you make with your after-tax money that you haven’t claimed a tax deduction for. Non-Concessional Contributions count towards the tax-free component of your Super which can have both estate planning benefits and tax savings benefits when you retire and start a pension.
It’s important to keep in mind that since 1st July 2017 a $1.6mil Lifetime Cap on the total amount of your Super that can be transferred into retirement phase has applied, known as the General Transfer Balance Cap. If you exceed the Cap the excess will need to be maintained in your accumulation Super balance. The $1.6mil Cap will increase over time as it is indexed annually with Consumer Price Index (CPI) but increased in $100,000 increments.
Since 1st July 2018, homeowners aged 65 or older (there is no upper limit on age) can make a Non-Concessional Contribution to Super from the sale proceeds of downsizing a family home they have owned for at least 10 years (other conditions apply). Couples can contribute up to $300,000 each to Super.
A contribution counts towards the financial year your fund receives the payment, so it’s important to make sure your year-end contributions are made in advance of 30th June 2019 with some time to spare.
Talk to your adviser well in advance of 30 June 2019 about whether making additional Superannuation contributions is the right strategy for you.
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