What you can stash away in super this year

Unused amounts: Any unused concessional contribution cap amounts (since 2018-19) can now be used, provided the total amount you had in super – your total superannation balance (TSB) – was less than $500,000 at June 30, 2022.

Work test: If you’re 67-74 and wish to make a personal deductible contribution, you must still first meet the work test – 40 hours of gainful employment in 30 days. If you don’t meet this test but met it in 2021-22 and had a TSB below $300,000 at June 30, you may contribute under the “work test exemption” provided you haven’t used this exemption before.

Personal top-ups: If you wish to top up your super, you can make a personal deductible contribution and/or arrange to make salary-sacrifice contributions via your employer.

With a deductible contribution, you must provide your fund with a notice of intent to claim a tax deduction and have it acknowledged. This is usually done around tax time, but if you intend to start an income stream, roll over or withdraw the contribution, it must be done first.

Making your own contribution gives you control and certainty over the amount and timing of the contribution and dealing with the cap at year-end. Also, you are not reliant on someone else, and have peace of mind knowing your money gets to your fund.

Many employers leave it for months between deducting money from wages and making the contribution. Unfortunately for some, the money never gets there. It also avoids a nightmare should your employer go into administration/receivership, as money deducted from salary but not contributed may take years to recover.

Salary-sacrifice: This allows you to “set and forget” for the year as contributions will automatically be made regularly. Making regular deposits into an investment at regular intervals is a powerful way to invest – known as dollar cost averaging. It provides the opportunity to build exposure to growth assets in a disciplined way, can reduce the risk of investing during volatile times and avoids the pitfalls of trying to time entry into markets. A salary-sacrifice arrangement is a way of implementing dollar cost averaging.

In calculating voluntary concessional contributions, include your employer’s SG contributions or notional taxed contributions for a defined benefit fund, and your fund’s administration expenses and premiums if paid by your insurance employer, as all count towards the cap.

Spouse splitting: You can split up to 85 per cent of your concessional contributions made in 2021-22 to your spouse’s super – to even up balances to maximise the amount you can both get into the tax-free retirement phase, to move entitlements from a younger to older spouse for earlier access to tax-free benefits, or from a spouse at or over age pension age to a younger spouse to shelter from Social Security means testing.

“Double” contributions: If you used a “contribution reserving strategy” in June to maximise your tax deduction in 2020-21, don’t forget to allocate that contribution by July 28 – only days away.

After-tax contributions

The work test no longer applies to non-concessional contributions, but you cannot contribute if your TSB was $1.7 million or more at June 30.

The cap is $110,000, but if your TSB was less than $1.48 million at June 30 – and you’re under 75 on July 1 – you may contribute up to $330,000. If it was between $1.48 and $1.59 million, then it’s $220,000 – but check your contribution history from July 1, 2020.

You could also make a spouse contribution provided they’re under 75.

Downsizers: You may be eligible to make a downsizer contribution of up to $300,000 if you sell a home that you or your spouse owned for at least 10 years and are aged 60 or more – boosting your super even if you’re otherwise inligible to contribute due to age or your TSB.

First home: If you’re using super to save for your first home, the maximum releasable amount of voluntary contributions made over multiple years under the First Home Super Saver Scheme is $50,000 (up from $30,000).

Small business: If you’re an eligible small business owner selling your business or an active business asset, don’t overlook the opportunity to make a CGT cap contribution of up to $1.65 million.

Rules for pensions

If you start your first retirement phase pension (ie, an account-based pension), the limit on how much you can transfer into it – your transfer balance cap (TBC) – is $1.7 million. But if you already have a pension, be mindful your personal TBC may be less. You can obtain your TBC from ATO Online.

The minimum pension drawdown rates remain halved but if you need more income, consider taking it as a lump sum “partial commutation” as it helps your TBC.

Now is the time to start planning to get ahead of the game.