Are you planning on making a voluntary super contribution? If you want to have it counted in the current financial year, your superannuation fund must receive the contribution no later than June 30, 2023, especially if you want to claim a tax deduction for the contributions.
Making additional contributions can be highly advantageous to your long-term financial and retirement goals.
At First Financial, we specialise in providing expert superannuation advice to help you maximise the benefits of your voluntary super contributions.
Understanding additional contributions
Any contributions you make to your superannuation beyond the compulsory contributions made by your employer are additional contributions. There are two primary types of additional contributions:
- Concessional contributions – concessional contributions are contributions made into your fund before tax, by lump sum or salary sacrifice. The ATO taxes concessional contributions within your super fund, at a rate of 15%. (or 30% if your income is above $250,000)
- Non-concessional contributions – non-concessional contributions are voluntary after-tax contributions made from your personal income or savings. The ATO does not tax these within your super fund.
Contribution caps and limits
The government sets annual limits on how much you can contribute to your superannuation, both on a concessional and non-concessional basis.
For the 2022/2023 financial year, the concessional contributions cap is $27,500. If you haven’t utilised your entire cap in previous years, your cap may be higher due to the carry forward of unused concessional contributions. You can check your available concessional contributions cap via myGov (ATO).
For non-concessional contributions this financial year, the cap is $110,000 per person. Your personal cap may be higher if you can use the bring forward arrangements, or nil if your total super balance is greater than or equal to the total super balance cap ($1.7 million from 2021–22).
Claiming voluntary contributions as a tax deduction
You may be able to claim deductions on voluntary super contributions to reduce your taxable income. You must make these contributions using your after tax income. Any personal contributions claimed as a deduction count towards your cap for concessional contributions. For a list of contributions you can claim and to check your eligibility, refer to the ATO.
To claim a deduction for contributions made to your super, you will need to submit a ‘notice of intent to claim’ form to your fund.
If you have any uncertainties regarding the form, including the required details for your super fund, we recommend contacting your adviser.
As June 30 draws near, the phone lines for your super fund are likely to experience high demand.
Your fund will provide a written acknowledgement of your notice. You will need to receive this before you can claim the deduction on your tax return.
Timing of contributions and your June 30 deadline
Timing matters when planning your contributions, both concessional and non-concessional. To prevent surpassing the non-concessional contributions cap and incurring additional taxes, it is crucial to monitor the amount and timing of your contributions.
As previously mentioned, to count contributions in this financial period, your fund must receive them before June 30, 2023. This means the contributions need to be received by the fund and not just sent before this date.
This also includes salary-sacrificed amounts. Note, your employer can make super guarantee contributions for the quarter ending June 30 by July 28, which would categorise them in the next financial year. To ensure timely receipt of your salary sacrifice contributions before the deadline, include this instruction in a salary sacrifice agreement with your employer.
Looking for expert guidance on optimising your superannuation strategies?
The end of the financial year presents a valuable opportunity to boost your retirement savings through additional contributions, as well as opportunities to take advantage of tax benefits.
While June 30 is your deadline for making super contributions that count for this financial period, it is never too late to start a conversation with us.
“If utilised fully and structured correctly, superannuation can form the centrepiece of your investing, asset protection, tax and estate planning objectives.”
At First Financial, we want to help you add certainty to your retirement with a secure plan for the future. We can devise tax-effective and smart strategies that equal more money for your senior years.
Contact us to speak with an experienced, knowledgeable financial advisor.
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