Now is an ideal time to review your superannuation strategy before 30 June, so you have time to discuss and implement a strategy without rushing and missing out. Making additional contributions to super can help grow your retirement savings while delivering valuable tax benefits. Below are several strategies worth considering before tax time.
- Concessional (Tax-Deductible) Contributions
Concessional contributions are made from pre-tax income and include your employer’s Superannuation Guarantee contributions, salary sacrifice contributions, or personal contributions where you claim a tax deduction.
The concessional contributions cap is currently $30,000 per financial year. These contributions are generally taxed at 15% within your super fund, which may be lower than your marginal tax rate, leading to tax savings. For many individuals, this makes contributing to super one of the most tax-effective ways to save for retirement.
- Catch-Up Concessional Contributions
If you have not used your full concessional contribution cap in previous years, you may be able to carry forward unused amounts for up to five years
This strategy allows eligible individuals with a total super balance under $500,000 to make larger deductible contributions in a later year. For example, someone who has not maximised their caps in recent years may be able to make a significantly larger contribution and claim a sizeable tax deduction while boosting their retirement savings.
- Non-Concessional (After-Tax) Contributions
Non-concessional contributions are made using after-tax money, meaning you do not receive a tax deduction. However, once inside super, investment earnings are generally taxed at 15% or less, which may be lower than tax on investments held personally.
The standard cap is $120,000 per year, and some individuals may be able to contribute more using the bring-forward rule if eligible.
Other strategies worth noting:
- Contribution splitting with a spouse to balance super amounts
- Spouse contributions may provide a tax offset
- Government co-contributions for eligible lower-income earners
- Downsizer contributions when selling a long-held family home
- First Home Super Saver Scheme contributions for those saving for their first home
As contribution limits and eligibility rules vary, seeking advice before 30 June can help ensure you maximise available opportunities, leading up to tax time. Speak to one of our expert advisers to review your superannuation strategy.