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Tuesday, 30 June 2020

Last chance (for most people) to maximise concessional superannuation contributions for this FY

As today is the last day of the FY, I checked my CFS (employer selected) superannuation funds online transactions for 1 June 2019- today to see what the total of 'employer' (SGL and Salary Sacrifice) contributions added up to for the current FY. I had intended to 'top up' any remaining gap to reach the $25K annual cap on concessionally taxed contributions. It turned out that because of a late payment for June 2019 (hit the account on 1 July), and an unusually large employer contribution for March 2020 (still not sure why that was - I suspect it relates to SGL being higher that month as the annual 'bonus' was paid out, but the increase doesn't correlate with the size of the bonus compared to normally monthly wage, so perhaps the monthly pay/SGL gets annualised and capped as if I was earning that monthly rate all year?) I had already exceeded the $25K annual cap on concessional contributions. So, I didn't make any extra contribution (which I would have been able to claim a tax deduction for if I lodged the relevant form with the super fund by the end  of next FY).

So, anyone that hasn't hit the annual $25K cap on concessionally taxed contributions (for example, if you don't have salary sacrifice arrangements in place), has today to make the payment (although you'd have to check that the funds transfer hits the super account with today's date or it might end up in next FY as far as the ATO is concerned).

There is also a small 'loop-hole' that allows people with super balances below $500K to 'carry forward' unused concessional cap amounts for five years (from 1 July 2018), so if you didn't make the maximum $25K concessional contributions last FY you may be able to make a larger contribution this year (or else if you don't max out your concessionally taxed contributions this FY and have a low enough super balance next FY, you can 'carry forward' the unused cap and make a larger 'catch up' contribution next year.

Of course this all requires you to a) have enough spare cash flow to make additional superannuation contributions, and b) want to put more money into super (its tax effective, but on the down-side it means the funds are inaccessible until 'preservation age' in most cases).

DW and DS haven't maxed out their concessional contributions this FY, so if they are working next year they may be able to take advantage of the 'carry forward' rule to make additional contributions next year.

There is a good source of information summarizing the various contribution rules here.

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