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30^th 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

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.

• The Concessional Contribution Cap is $25,000 per annum.
• Concessional Contributions to Super are taxed in the fund at a concessional tax rate of 15% which may be lower than your personal marginal tax rate, so increasing your concessional contributions could reduce your tax.
• From 1 July 2018 you can now carry forward any unused amount of your Concessional Contribution Cap for up to 5 years, provided your total Super balance is less than $500,000 at the end of the previous financial year. You can start accessing this on a rolling basis from 1^st July 2019 onwards.
• There is now more flexibility to use your Concessional Cap. You can make voluntary personal contributions to Super from your after-tax income and elect for this to be counted towards your Concessional Contribution Cap. To do this you must submit a ‘Notice of Intent to claim a Tax Deduction’ to your superannuation fund and receive a letter of acknowledgement from the fund, before you complete your individual tax return for that financial year.
• From ages 65 to 75, you can make voluntary Concessional Contributions if you’ve worked for at least 40 hours in 30 consecutive days in that financial year. This ‘work test’ must be met before you make the contribution.
• From age 75 you can’t make personal contributions.

Non- Concessional Contributions

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 1^st 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.

• The Non-Concessional Contribution Cap is $100,000 per annum.
• To make a Non-Concessional Contribution an individual must have a total Super balance of less than $1.6mil on the 30th June of the previous financial year. This will determine both your eligibility to make the contribution and the amount that you can contribute, depending on how close you are to the $1.6mil account balance cut-off.
• If you are under 65 at the 1^st July 2018 you can use the three year bring forward rule and potentially contribute up to $300,000 in one financial year. Generally, you can only bring forward the annual cap amount for the number of years that would take your balance to $1.6mil. For example, if your 30 June Balance was $1.4 – $1.5mil you could bring forward 2 years of the annual cap to make a $200,000 contribution.
• From ages 65 to 75 you must meet the ‘work test’ and you can’t bring forward any contributions i.e. the $100,000 annual cap applies.
• Non-Concessional Contributions are not available to individuals age 75 or older.

Downsizer Contribution

Since 1^st 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 30^th June 2019 with some time to spare.

What to do?

Talk to your adviser well in advance of 30 June 2019 about whether making additional Superannuation contributions is the right strategy for you.

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL No. 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the relevant Product Disclosure Statement (PDS) of any financial product discussed in this article before making any decision to acquire it. Please refer to our FSG for contact information and information about remuneration and associations with product issuers.