Your guide to Voluntary Super Contributions
With the end of financial year looming, it is a great time to take stock of what contributions have been made to your super fund over the tax year and consider making additional voluntary contributions.
What are the types of contributions you can make to super?
These are many and varied and our table below will flesh out some of the general attributes, and as always it is important to seek advice particular to your circumstances.
Note that the details following are based on current expected rate of Superannuation guarantee sitting at 10.5% per annum currently and likely to follow the pattern below for those 18 years of age and older(unless working more than 30 hours per week):
Table 1 – expected Super guarantee (employer contribution) rates
| Year | % of ordinary time earnings |
| 2023/2024 | 11% |
| 2024/2025 | 11.5% |
| 2025/2026 and later years | 12% |
Table 2 – The accumulators guide to voluntary contributions;
| Type | Tax matters | Limits | Other notable matters |
| Concessional – referred to herein as CC | Tax deduction applies for employer concessional (the employer receives deduction), salary sacrifice or personal concessional (individual receives deduction). Pre-Tax and these are referred to as Taxed super within your fund. | $27,500 per annum, however since 1/7/18 individuals can carry forward unused CC caps up to 5 financial years. (This requires careful planning, so don’t try this at home!) | Taxed at 15%, and allows a tax deduction for either employer or individual. Excess contributions are taxed at marginal rates. An additional 15% tax applies to CC’s made by high income earners: Income threshold is $250k. Maximum salary for CC calculation: $240,880 per annum. |
| Non-Concessional | After tax, so no tax deduction applies. These are referred to as Untaxed Super within your fund. These mainly have additional tax benefits when paid to non-financial dependents (ie adult children, grandchildren, etc) on death | $110,000 per annum with an ability to bring forward up to 3 years’ worth of contributions in a given financial year, dependent upon previous years contributions. The availability or not of this bring-forward is reliant upon an individual’s Total Super Balance (TSB) at 30 June the year prior to the proposed contribution. | Excess contributions, it is important to get the strategy right, since excess Non-concessional contributions are tricky to navigate and a convoluted process. Suffice to say, exceeding Non-Concessional limits will most likely force a withdrawal from Super of the excess amount. |
| Government co-contributions | Applies to those earning less than $57,016 (however this does include reportable super contributions). This is of most benefit for those earning below $42,016 as it allows for maximum of $500 government co-contribution on contribution of $1,000. | Maximum contribution $1,000, leads to maximum Gov’t co-contribution of $500. Would be good to provide a link here to the RESC calc. | Total Super balance must be below $1.7 Million at 30 June prior financial year. Minimum amount payable is $20. |
| Low income Super tax offset | Adjusted taxable income must be less than $37,000 | Amounts payable is the lesser of 15% of eligible contributions, and $500. The minimum amount payable is $10 | Must not hold eligible temporary resident visa. Would be good to provide a link here to ATO re: Adjusted Taxable income definition. |
| Downsizer Contributions | After tax contributions. These must be limited to capital proceeds from disposal of Australia based property, meeting certain rules such as main residence for 10+ years. | $300,000 per person – lifetime limit. | Contract for sale post 1/7/2018 only. Contribution must be made within 90 days from settlement. Individual must be 55 or older at time of contribution. |
| Contribution Reserve Strategy | Unique strategy to assist in offset of larger tax positions in particular financial year due to increase salary, capital gains realization, or other taxable outcomes. | $27,500 per individual. Must ensure that the particular documentation and minutes are completed within 28 days after the end of the financial year in which contribution is made. | Must ensure that individual’s Super fund will accept the contribution, and their trust deed allows for contribution reserves. This is often a realm of helpful strategies particular for Self-Managed Super fund members. |
In recent years, eligibility to has been expanded, as many people had previously found it difficult to contribute beyond age 67 (and until recently beyond 65). Now eligibility has been opened up for those at or approaching age 75. Now Super fund providers can accept contributions for individuals up to 28 days after the month in which the member achieves age 75. The contributions no longer requires a work test as it once did, however this requires further examination. For those aged 67 – 75 wishing to contribute and receive a tax deduction for personal contributions, a work test does apply.
If you would like to discuss your eligibility to make additional voluntary Concessional contributions in this Financial year to avail yourself of a tax deduction, or explore any of the other contribution types listed in the table above, please feel free to contact us via our website, phone 07 3378 9681 or email admin@p3fp.com.au
