How to pack four years of super into two months

You may feel prepared for tax season as June 30 approaches, but there are a few extra steps you can take to boost your retirement and future financial success.

Maximize your contributions

Do what you can to maximize your retirement benefit, using both concessional (pre-tax, such as salary sacrifice) and non-concessionary (post-tax, such as voluntary payments) contributions. Pay attention to contribution limits; If you exceed these, you will pay extra tax.

The annual concessional cap is currently $30,000, while the non-concessional cap is $120,000. According to ATO. There is some flexibility in the management of these caps; You can find more information about this below.

It is also important to be intentional when submitting contributions; because it is important for tax purposes that they reach your fund on time.

“One thing people often overlook is timing – contributions need to arrive in your retirement fund by 30 June, not just be sent on the day,” warns Kate Rolfe, retirement experience lead at Aware Super. “Leaving it too late could mean missing out on the tax benefit altogether.”

Compensating for past shortcomings

Jason Chew, head of advice at Vista Financial Group, says you’ll have a capacity increase if you haven’t reached the caps for pre-tax contributions in the past.

“There is such a thing as a carry-forward contribution or allowance,” he says. “This allows you to use unused concessional contributions going back up to five years. A lot of people don’t know about this.”

But there’s a catch: “You need to do this before your super balance reaches $500,000 for that financial year.”

Bring forward future payments

You can increase your capacity by using the bring-forward rule for non-privileged contributions. “You can use the preemption rule, and that’s three years of nonconcessional contributions, which is currently $360,000,” Chew says.

Scheduling this around the June 30 cutoff date, contributing some before the deadline, and bringing it forward in July means you can add a sizeable amount to your retirement.

“In just two months you can actually put four years’ worth of contributions into the pension fund; the non-concessional contribution and the carry-forward rule can be used very closely together,” says Chew.

There are various limits as well as potential tax consequences associated with both of these options; so be sure to do your research or talk to a professional.

Be a super wife

Did you know that you can also contribute to your spouse’s pension and vice versa? “Spousal contributions are when one partner contributes to the other partner’s pension, usually when that partner earns a lower income,” explains Rolfe.

“The contributing spouse may be entitled to a tax offset and this can help balance pensions between partners, which can then be beneficial for tax, flexibility in retirement and even age pension eligibility.”

You can also split super contributions from the last financial year between your own account and your partner’s account. Rules vary by provider; so check with your fund for specific options.

Get a super health check

Using this time of year to take a general look at your retirement situation can have wider benefits, adds Rolfe, and says it’s worth looking at insurance options such as income protection in your superannuation fund.

Chew agrees: “A lot of people have insurance they don’t know about, so know what you’re paying for.” It’s also a good time to check your retirement fund’s investment mix.

“Not all pension funds perform the same,” says Chew. “Some have different options, and if you don’t choose one, they will effectively choose one for you.”

Looking at the risk level of these investments and switching funds (if it suits your financial goals) can be a way to positively impact your retirement fund.

“The end of the fiscal year isn’t just about adding money,” says Rolfe. “These checks are not always subtle, but they can have a big impact on long-term outcomes.”

• The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.

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