As it is June, it is timely to review the contribution limits applying in this financial year, so you can maximise the amount going into your fund. It is also time to review pay slips and statements to check how much has already been contributed.
As detailed below, although the contribution limits are generally straightforward, the application of the rules can be tricky in certain circumstances. If you are unsure, consult your financial adviser or accountant.
The maximum that can be contributed as concessional (or pre-tax) contributions is $25,000 this financial year. These consist of employer contributions – superannuation guarantee, other voluntary employer and salary-sacrifice contributions, and personal contributions that you claim a tax deduction for.
Members can also make up the difference between their employer contributions and the $25,000 limit by making extra personal contributions before 30 June, and claiming a tax deduction in their personal tax return, ensuring the relevant ATO claim form is submitted to your fund before lodgement of your return.
Carry forward concessional contributions
These are not an additional type of contribution but new rules that allow superannuation fund members to use any of their unused concessional contribution limit on a rolling basis for five years.
These rules apply from 1 July 2018, but the first date from when carry forward contributions can be made is the next financial year – from 1 July 2019.
To be eligible, a member has to have a total superannuation balance (the total amount you have in superannuation, across all funds) at the start of a financial year of less than $500,000. If that applies, then any “unused” part of your concessional cap from 1 July 2018 onwards can be added to the next financial year’s cap, for a maximum of five years.
After-tax contributions can also be made by members (called non-concessional contributions) and these are limited to $100,000 a year.
Some special restrictions apply to non-concessional contributions:
- If your total superannuation balance is $1.6 million or more, then you may not make any non‑concessional contributions.
- The “bring forward” rule allows members to contribute up to 3 years’ worth of contributions in one year. However, this rule currently only applies to members aged under 65 at any time in the financial year.
- If you meet the age restriction on using the “bring forward” rule in a financial year, you also have to meet tests relating to your total superannuation balance:
- If your total superannuation balance is less than $1.4 million at the start of a financial year, then the maximum amount of the “bring forward” is available;
- If your total superannuation balance is more than $1.4 million at the start of a financial year, but less than $1.5 million, then the maximum amount of the “bring forward” that can be utilised in that financial year is $200,000; and
- If your total superannuation balance is more than $1.5 million at the start of a financial year, then the “bring forward” rule is not available.
If you have sold assets, or a business, or inherited under an estate, you may wish to consider putting some of this into superannuation in this way. Getting good advice as to how to do this and how the rules work is always worth it.
Make sure the contribution is made before 30 June
All these contributions must be received by your fund on or before 30 June to count for this financial year. This generally means that a cash contribution must be credited to the bank account of the fund by this deadline. Some banks and some superannuation funds have deadlines a day or two before 30 June by which contributions must be made in order to count in the financial year – make sure you allow enough time.
If making a contribution by way of transfer of an asset (like shares or units in a managed fund), a properly executed transfer document must be completed and received by trustees before this date. Asset contributions are a little trickier and getting advice on what to do is a good idea.
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