The amount you can contribute to your super each financial year before paying extra tax is generally capped, with different caps applying depending on the type of contribution you make.

However, a couple of special rules can help you extend those caps and give your super an extra boost.

What are the different types of contributions?

There are two types of contributions you can make to your super: concessional and non-concessional.

Concessional contributions

Concessional contributions are those made from your pre-tax salary. They include:

  • The contributions your employer makes
  • Salary sacrifice contributions
  • Personal contributions claimed as a tax deduction

Making contributions from your pre-tax salary could be a tax-effective way of investing. This is because concessional contributions are taxed at 15% when they’re received by the fund. After-tax or non-concessional contributions, meanwhile, are made after you’ve already paid income tax, which for most people is paid at a higher rate.

You can make up to $25,000 worth of concessional contributions in the 2020/21 financial year.

It’s important to note that there may be specific rules for your division about concessional contributions – you can learn more about what rules apply to you here.

Non-concessional contributions

Non-concessional contributions are those made from your after-tax salary.

You can make this type of contribution via BPay, or you can arrange with Payroll for a portion of your after-tax salary to go into your super.

You can make up to $100,000 worth of non-concessional contributions in the 2020/21 financial year.

Watch this short video to learn more about the different types of contributions:

Expanding your caps

Carrying forward unused concessional contributions

While the current annual cap for concessional contributions $25,000, a special rule called the ‘carry forward’ rule can help you maximise this. It works by allowing you to make the most of any unused amounts under the cap from previous financial years.

If your total superannuation balance is below $500,000 as of the previous 30 June, you can carry forward unused amounts over a rolling five year period, with unused amounts from the 2018/19 financial year the first you can carry forward.

For example, if you only made $10,000 of concessional contributions in each of the 2018/19 and 2019/20 financial years, you would be able to contribute a total of $55,000 in the 2020/21 financial year: the annual $25,000 up to the cap, plus the $15,000 of unused contributions carried forward from 2018/19, and the $15,000 left unused from 2019/20.

If you maximised your contributions this way in 2020/21, utilising your past and current financial year’s cap, your new rolling five-year period would then begin in 2021/22.

Bringing forward non-concessional contributions

The amount you can contribute to your super each financial year from your after-tax salary is currently capped at $100,000, but a special rule can help you maximise this amount.

If your total superannuation balance is below $1.4 million as of the previous 30 June and you are aged under 65 at any point during the current financial year, you can make up to three years’ worth of after-tax contributions in one year by tapping into your future cap space in advance.

As the annual cap for non-concessional, or after-tax, contributions is $100,000, so this means you could contribute up to $300,000 in one financial year.

Check how much you've contributed

If you want to make additional contributions, it’s a good idea to give us a call to check how much cap space you have available to either carry forward your concessional contributions, or bring forward your non-concessional contributions. We can tell you how much you’ve already contributed and how much more you can contribute before hitting the relevant limits.

Before making extra contributions, also remember that your money will be locked away until you reach your preservation age, which could be decades away – so it’s important to think about how much you can afford to contribute.

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