Maximising your Superannuation Contributions before 30 June 2017
The Government is set to make changes to the amount of money you can contribute to your superannuation from 1 July 2017. It therefore makes sense to review your contribution strategy in the lead up to these changes as superannuation, with its many tax benefits, is an attractive way to build your retirement savings.
For those eligible to contribute to superannuation, current legislation allows you to make non-concessional (after-tax) contributions of $180,000 per financial year. You can also ‘bring forward’ three years worth of contributions to invest up to $540,000. Currently, the amount you can contribute as a concessional contribution (before tax) is limited to $30,000 if you are under 49 and $35,000 if you are 49 or older at 30 June 2016.
What are the changes to contribution limits?
From 1 July 2017, non-concessional contributions will be restricted to a maximum of $100,000 or up to $300,000 in a financial year when using the ‘bring-forward’ provisions.
The Government is also reducing the concessional contributions cap to $25,000 per financial year regardless of your age.
What tax applies to contributions to superannuation?
No tax is payable on non-concessional contributions to superannuation within the allowable caps.
Concessional contributions are taxed at 15%. If you pay tax, this rate is lower than your marginal income tax rate of up to 49% including Medicare.
What are the benefits of contributing to superannuation?
Maximising your contributions to superannuation before 30 June 2017 may provide you with:
- The ability to contribute more to superannuation, before the limits are reduced
- The opportunity to reduce your taxable income
- An effective way to boost your retirement savings
- The ability to optimise a current, or future Centrelink benefit
How to maximise your contributions?
Should you have surplus income for your everyday needs, you may consider commencing or increasing salary sacrifice contributions to super. Alternatively, if you have recently sold a property, received an inheritance or redundancy or have surplus cash from savings, you may consider making a non-concessional contribution to superannuation.
To assess whether any of the above opportunities are possible for your situation, we recommend you speak with your financial adviser.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Before making any decisions on the basis of this communication, you should consider the appropriateness of its content having regard to your particular investment objectives, financial situation or individual needs. Please seek personal advice from a Certified Financial Planner prior to acting on this information.