Making extra contributions may be a tax-effective way to boost your super before you retire.
The more you put into your super while you’re working, the more money you will have to live the retirement lifestyle you want. If you’re not sure what this might look like, we have some information about setting your goals and how much money you might need to achieve them.
Before you make extra contributions, you need to be aware of the limits and how contributions are taxed.
Understand contributions and caps
Contribution caps
If you exceed the contribution caps, you may pay more tax. Talk to a UniSuper financial adviser on 1800 823 842 before you make extra contributions.
Contributing to your super from your before-tax salary may:
- Reduce the income tax you pay, and
- Give your super a boost.
You can also contribute using your after-tax salary. Remember, the government puts limits on the total amount of contributions you can make before they’re taxed at a higher rate so, make sure you think about these limits before you make a decision.
Contribution caps apply to all the contributions you make, or have been made on your behalf, in a financial year. It’s your responsibility to monitor the contributions made into your UniSuper account, and to any other super accounts you have, to ensure you don’t exceed the caps.
Before-tax contributions
You can contribute up to $25,000 of concessional contributions in the 2018-19 financial year and incur the 15% contributions tax, provided we have your TFN and Division 293 tax (very high income earner tax) doesn’t apply to you (see how super is taxed). Any concessional contributions exceeding this limit will be added to your assessable income and taxed at your marginal rate, and you may also incur an excess concessional contributions charge.
From 1 July 2018, if you have a total super balance of less than $500,000 on 30 June of the previous financial year, you can carry forward any unused concessional contributions under your cap on a rolling basis for five years. This means that from 1 July 2019 you may be able to access unused concessional contributions for one or more of the past five financial years on a rolling basis.
Find out more on the ATO website.
After-tax contributions
After-tax contributions include voluntary contributions you can make from your salary after income tax has been deducted. Your after-tax contributions are treated as ‘non-concessional’ contributions in applying the contributions cap. See also, Downsizer contributions.
If your total super balance at 30 June of the previous financial year is less than the general transfer balance cap (which is currently $1.6 million), you can generally contribute up to the annual non-concessional (after-tax) contributions cap of $100,000.
If you’re under 65, you may be able to ‘bring forward’ up to three years of non-concessional contributions if your non-concessional contributions exceed the cap in a financial year. The cap amount you can bring forward, and whether you have a two- or three-year bring forward period, will depend on your total super balance at the end of June of the previous financial year.
For more information read How super is taxed, or visit the ATO website.
Work test exemption
From 1 July 2019 a new one year exemption from the work test applies for some retirees. Australians aged 65-74 with a total superannuation balance below $300,000 as at the previous 30 June, will be able to make voluntary contributions to their super for 12 months from the end of the financial year in which they last met the work test – this will be known as the work test exemption.
Contributions and caps for DBD members
If you’re a DBD member, the concessional contributions tax rules also apply as well as other rules. For more information, read:
Get advice
Talk to UniSuper Advice on 1800 823 842 to find out how they can help you.