As the financial year comes to a close, it’s important to consider your superannuation contributions before 30 June. This is a great time to boost your retirement savings and potentially reduce your 2023/2024 tax bill.

Contribution Caps and Strategies

For the 2023/2024 financial year, the concessional contributions cap is $27,500. These are pre-tax contributions, including employer contributions and any amounts you salary sacrifice. It’s worth checking if you’ve reached this cap, as exceeding it could result in additional tax.

Concessional contributions are taxed at a rate of 15%. However, if you have taxable income in excess of $250,000, these contributions are taxed at 30% due to Division 293 tax. The tax is paid by the super fund, not directly by you.

Non-concessional contributions, made from after-tax income, have a cap of $110,000 for the year. However, if you’re under 75, you may be able to bring forward up to three years’ worth of non-concessional contributions, allowing you to contribute up to $330,000 in one year. Make sure you check with us before making these contributions.

Catch-Up Contributions

If you haven’t fully utilised your concessional contributions cap in previous years, you may be eligible to make ‘catch-up’ contributions. This can be particularly beneficial if you anticipate a higher personal income this year, as it could reduce your taxable income. Speak to us if you want to check if you are eligible to make these contributions.

Government Co-Contribution and Spouse Contributions

For low or middle-income earners, making personal after-tax contributions could entitle you to a government co-contribution of up to $500. People who earn less than $43,445 receive the full 50c for every $1 they contribute. For every $1 earned above this threshold, the co-contribution is reduced. Once your income exceeds $58,445 you do not receive any co-contribution at all.

Additionally, contributing to your spouse’s superannuation could not only help grow their retirement nest egg but also provide you with a tax offset. Here’s how it works:

• You can contribute to your spouse’s super fund and, if eligible, receive a tax offset of up to 18% on contributions up to $3,000.
• The maximum tax offset of $540 is available if your spouse earns $37,000 or less per year.
• The tax offset gradually reduces for income above this amount and completely phases out when your spouse’s income reaches $40,000.

Seeking Professional Advice

Superannuation is a complex area, and the right strategy depends on your individual circumstances. We recommend seeking professional advice to ensure you’re making the most of your superannuation opportunities. Please reach out to us if you have any questions.

Conclusion

Effective superannuation planning can significantly enhance your retirement savings. By taking action before the end of the financial year, you can set yourself up for a more secure financial future.

Stay tuned for our next article in this series, where we’ll discuss strategies for maximising your tax return.