Recent changes to superannuation mean you can now add more into your super without hitting the ‘concessional cap’.
It can be tricky to get your head around all the different types of contributions, but the most common type of payment into your account will most likely be concessional. These are the payments your employer makes into your account (the superannuation guarantee, or SG), and any additional salary sacrifice you may choose to contribute.
Changes to concessional contribution caps
The concessional contribution cap for the 2020/2021 financial year is set at $25,000 regardless of your age, but eligible members are now able to add extra into super in order to ‘catch up’ on what they did not use in previous years, up to a maximum five years.
To be eligible for catch up contributions, your total superannuation balance at the end of June 30 of the financial year prior to the year of contribution must be less than $500,000.
How do I know how much I can put in?
In the lead up to the end of financial year, you may want to check in and view how much of this cap you have left to contribute. All you need to do is log in, scroll down and click “Make extra contributions” and on the side from the drop-down menu, select “Contribution caps”:
Note that contributions you see on this page are calculated based on what you put into your Vision Super account. Make sure you add any contributions made into other super funds (including contributions that your employer or spouse might make on your behalf) to the total because It’s the total contributions that count towards the caps for the financial year.
Contributions need to be received by 30 June to be counted towards this financial year’s contribution cap. There are a few ways you can contribute, including EFT (bank transfer), cheque and Bpay. You can find the relevant details when you log in to your Vision Super account.
These types of contributions are also known as after-tax contributions or personal contributions. Non-concessional contributions are contributions you choose to pay into your super from your after-tax income or savings. You can do this at any time, either as a regular transfer or a one-off payment from your bank account. And, because you’ve already paid tax on your income, after-tax contributions are not taxed again when you deposit them into your super account. You might also be able to claim a tax deduction, to reduce the amount of tax you pay in a financial year.
The total non-confessional contributions you can put in is $100,000 for the 2020/2021 financial year.
If you are under age 65 at any time in a financial year you may effectively bring-forward up to two years’ worth of non-concessional cap for that income year, allowing you to contribute a greater amount (ie up to $300,000 in a given financial year) without exceeding your non-concessional cap. This is known as the ‘bring-forward rule’. There are other eligibility criteria you need to know about so give us a call or speak to a financial adviser if you’re unsure.
Please remember, that while these caps are correct for the 2020/2021 financial year, they are always changing and will be different again in the next financial year.
We’re here to help
Contributing money into the low tax environment of superannuation can be beneficial, but the rules surrounding eligibility and contribution caps are complicated and changing, so before contributing money into superannuation, you should contact your accountant to confirm which contributions limits apply to your personal circumstances. To find out more about contributing, click here, and if you’d like to have a chat with us about how to make your savings grow, call us on 1300 300 820 Monday to Friday 8:30am to 5pm.
The great news is you can now open your pension account online through the secure site.
You’ll just need to open a Vision Personal account first and then you can transfer across to a Vision Super pension.