Adding to superannuation: What are my options?

December 8, 2023 BY

There are various ways to improve your superannuation balance, each with their own benefits and drawbacks.

Adding money to superannuation offers various avenues, each with unique benefits for your financial situation.

It’s crucial to comprehend these options, but keep in mind that only high-level eligibility criteria are provided here.

Seeking professional advice is strongly recommended for a better understanding of how these strategies can align with your goals.

Non-concessional contributions

Available for those under 75, non-concessional contributions involve personal superannuation contributions without claiming a tax deduction.

The advantage lies in avoiding the 15 per cent contribution tax, and such contributions become part of the tax-free component of your superannuation account, offering benefits for estate planning.

The usual cap for non-concessional contributions is $110,000 per financial year, with a potential “bring forward” provision allowing up to $330,000.

Government co-contribution

Workers with taxable income under $42,016 can make a $1,000 non-concessional contribution, with the government automatically crediting their account with $500.

This benefit scales down as income increases, ceasing at $57,016.

Concessional contributions (salary sacrifice)

Commonly known as salary sacrifice, concessional contributions involve directing part of your wage to your superannuation fund.

The contribution is taxed at 15 per cent upon entry, a favorable rate compared to potential marginal tax rates reaching 45 per cent.

Alternatively, making a lump-sum contribution to your superannuation account and claiming a tax deduction achieves the same tax effect.

The annual limit for concessional contributions is $27,500, with the option to “carry forward” unused amounts from previous financial years, subject to eligibility criteria.

Spouse contribution

Contributing up to $3,000 to your spouse’s superannuation account can attract an 18 per cent tax offset if their taxable income is below $37,000.

The benefit scales back as your spouse’s income increases, ending at $40,000 with no benefit payable.

Downsizer contributions

For those over 55, contributing up to $300,000 per person (or $600,000 per couple) from home sale proceeds is possible.

These contributions don’t count toward concessional or non-concessional caps, but certain conditions apply, including making the contribution within 90 days of sale settlement and completing required forms.

For professional advice, contact Muirfeld Financial Services online at muirfieldfs.com.au or phone 1300 242 700.

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