How can I contribute more money into superannuation?


So how can we now contribute some more money into super to take advantage of the 15% income tax rate pre-retirement and 0% rate thereafter?

NON-CONCESSIONAL LIMIT – $100,000 PER ANNUM

As part of the trade off for the government scrapping the $500,000 lifetime cap on non-concessional contributions, a new measure is being introduced limiting non-concessional contributions to $100,000 a year, down from a cap of $180,000 per annum.

Employees will be able to invest up to $100,000 a year into their fund, from after-tax income, until their superannuation reaches the limit of $1.6 million.

If you are under 65 of age, you can still bring forward two additional years’ contributions in a single year (the 3 year rule) meaning that you can make a $300,000 non-concessional contribution in a single year (and nothing for the next 2 years) and can continue doing so up to the $1.6 million cap.

If you are over 65, you cannot take advantage of the option and are limited to a non-concessional contribution of $100,000 per annum.

CONCESSIONAL CONTRIBUTION ‘CATCH UP’ STRATEGY

The government has announced that they will decrease the annual concessional cap for all members to $25,000 from 1 July 2017. For the 2017 year, the cap remains as  $35,000 for those over 49 and $30,000 per annum for everyone else.

The government’s current plan is to allow members after 1 July 2018 to make ‘catch up’ payments of concessional contributions based on their contribution cap limits, calculated over a rolling five-year period (provided you have an account balance of less than $500,000) and to lift the previous virtual-prohibition on making personal concessional contributions while your employer made SGC contributions.

SO HOW MUCH CAN I INVEST INTO SUPER NEXT YEAR?

The proposed changes effectively mean that, commencing from 1 July 2017, in any one year a member will be able to contribute $125,000 into their superannuation fund; $100,000 being a non-concessional contribution and $25,000 (inclusive of SGC) as a concessional contribution.

If you have the funds to invest more, then the member can make three year’s non-concessional contributions in the 2017-2018 year and together with their $25,000 annual concessional contribution, contribute $325,000 in that year.

If you’d like to discuss how this affects you, feel free to give Noel a ring on 03 9585 7555 or email him atnoel@mktax.com.au


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