5 ways to max your superannuation before EOFY

Superannuation is hardly a sexy topic – but it is an important one. That is, it’s important to stay on top of it if you intend to be able to live comfortably in retirement. It’s also an often-forgotten investment. After all, the most any of us might even think about our superannuation is when we look at our payslips and note the money flowing into it. 

It’s only a month to the end of the financial year but that doesn’t mean it’s too late to make contributions if you’ve been meaning to and forgotten.

Here are five things you should know about before the end of the year.

Please note I’m not a financial adviser, or an accountant. I also don’t know your personal financial circumstances so make sure you talk to an expert and do your research first.

1) Concessional contributions

Concessional contributions are payments made pre-tax and includes your superannuation guarantee payments – that is, the payments your employer makes on your behalf. The total cap on concessional contributions is $27,500 for this financial year. Contributions under this cap are taxed at a rate of 15%. An additional 15% tax is applicable to the concessional contributions of high-income earners – those earning $250,000 or above including their super.

If you are unlikely to hit your cap (and pending your desire and circumstances), you could make additional contributions yourself up to the cap before the end of the financial year.

2) Non-concessional contributions

Pre-tax contributions are not the only bite at the pie. You can still contribute to your superannuation if you want to outside of concessional contributions, and there is a different cap involved. These contributions are made after-tax – that is, you have already paid tax at your marginal tax rate before making these contributions. Your superannuation balance also needs to be less than $1.7 million.

The cap on these is $110,000 for this financial year.

3) Unused concessional contribution carry forward

If you have a total superannuation balance of less than $500,000 as of 30 June 2022, you might be able to ‘carry forward’ unused concessional contribution amounts from the past, up to a maximum of five years. What does this mean? You might be able to contribute extra to reach the caps of the past.

Contribution caps have changed over the years – so keep this in mind when you calculate your carry forward. For example, the concessional contribution cap was $25,000 prior to FY22, and changed to $27,500 in 2021-2022.

4) The bring-forward rule for non-concessional contributions

If your superannuation balance is under $1.7 million, the bring-forward rule allows you to combine up to three years’ worth of non-concessional contributions in one year. So say you wanted (and were able) to, you could contribute up to $330,000 this financial year and that would represent your non-concession contributions for this tax year, as well as 2023-24 and 2024-25.

5) The downsizer rule

Over 60 years old and sold the family home (held for over 10 years)? This one is for you. You can contribute up to $300,000 from the proceeds in a lump sum to your superannuation.

Some additional contribution options to think about…

• Low income earners earning under $37,000 can apply for a rebate of up to $500 into their superannuation via the Low Income Superannuation Tax Offset. This is because the 15% applicable to concessional contributions would be above the applicable marginal tax rate for incomes under $37,000.
• Earn under $50,016 this financial year? If you contribute up to $1000 after-tax to your superannuation, you might be eligible for a government co-contribution of up to $500.
• Partners can chip in. If your partner earns less than $40,000 and you make an after-tax contribution to their superannuation of up to $3000, you can claim a tax offset of up to $540. Alternatively, you can ‘split’ your concessional contribution with your partner as long as both of your total concessional contributions remain under the $27,500 cap – this one can be done by arrangement with your superannuation fund after the end of the tax year.

On a final note, always talk to an expert about the best approach for you and your finances. I'm not just talking about contributions here, I'm also talking about whether your superannuation meets your needs. If you aren't sure, talk to a financial adviser or look at tools like Super Fierce which can help research options for you.

And, of course, stay up to date with ATO superannuation rules here– no one wants an unexpected tax bill when they thought they were boosting their superannuation!