Brought to you by Aware Super
Cameron Bayley
As June 30 approaches, you might feel prepared for tax-time, but there are several extra steps you can take to boost your superannuation and future financial success.
Maximise your contributions
Do what you can to maximise your super, using both concessional (before-tax, such as salary sacrifice), and non-concessional (after-tax, like voluntary payments) contributions. Be mindful of contribution caps – if you exceed them, you’ll pay extra tax.
The annual concessional cap is currently $30,000, while the non-concessional is $120,000, according to the ATO. There is some flexibility in the management of these caps – more on that below.
It’s also important to be conscious of when you’re sending contributions as it’s essential for tax purposes that they reach your fund on time.
“One thing people often overlook is timing – contributions need to reach your super fund by June 30, not just be sent that day,” warns Kate Rolfe, retirement experience lead at Aware Super. “Leaving it too late can mean missing out on the tax benefit altogether.”
Make up for past shortfalls
If you haven’t hit the caps for before-tax contributions in the past, you’ll have added capacity, explains Jason Chew, head of advice at Vista Financial Group.
“There’s a thing called the carry-forward contribution or allowance,” he says. “That allows you to use previous unused concessional contributions going back up to five years. Many people don’t know about it.”
There is a catch, however: “You have to do it before your super balance is $500,000 for that financial year.”
Bring forward future payments
For non-concessional contributions, you can increase your capacity using the bring-forward rule. “You can use the bring-forward rule and that is three years of these non-concessional contributions, which is currently $360,000,” says Chew.
Timing this around the June 30 cut-off date, with an amount contributed before the deadline, plus using the bring-forward in July, means you can add quite a chunk to your super.
“In just two months, you can actually put in four years’ worth of contributions to super – the non-concessional contribution and the bring-forward rule can be used very close to each other,” Chew says.
There are various limits as well as potential tax implications related to both of these options, so make sure you do your research or talk to a professional.
Be a super spouse
Did you know you can also contribute to your spouse’s super, and vice versa? “Spouse contributions are when one partner contributes to the other partner’s super, usually when that partner earns a lower income,” explains Rolfe.
“The contributing spouse may be eligible for a tax offset, and it can help balance super between partners – which can be beneficial later for tax, flexibility in retirement, and even age pension eligibility.”
You can also split super contributions from the last financial year between your account and your partner’s. Rules vary by provider, so check with your fund for specific options.
Do a super health-check
Using this time of year for a general sense check on your super can have broader benefits, adds Rolfe, who says examining insurance options inside your super, such as income protection, is worthwhile.
Chew agrees: “Many people have insurance in their super that they don’t know about. So just know what you’re paying for.” It’s also a good time to check on your super’s investment mix.
“All superannuation funds don’t perform the same,” says Chew. “Some have different options and if you don’t select one, they’ll pick one for you, effectively.”
Looking at the level of risk of these investments and switching funds – if that aligns with your financial goals – may be a way to positively impact your super.
“The end of the financial year isn’t just about adding money,” says Rolfe. “Those checks don’t always get attention, but they can have a big impact on long-term outcomes.”
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.
