Turbo-Charging Your Super – How To Grow Your Superannuation Fund

Starting from the 2019-20 financial year you can direct more into your super and tap into a concessional tax rate

Your superannuation is your main means of funding a comfortable retirement. So, growing your super should be an important focus in investing for your retirement.

The tax benefits you receive when saving via your super make it one of the best ways to boost your savings while building a retirement nest-egg.

A recent study showed many retired Australians would have opted to make extra contributions to their superannuation if they could.

Unfortunately, it’s not always easy to find the spare funds needed to make those additional investments in your superannuation.

However, there are times in your working life when you have the flexibility to direct funds into your super. Happily, the new legislation allows you to channel additional contributions into your super that attract the concessional tax rate.

Concessional Contributions

Contributions into your superannuation fund attract special tax treatment. The majority of us will find ourselves paying less tax on our superannuation contributions than we do on our personal income.

These concessional superannuation contributions can be made:

  1. By your employer via salary sacrifice or a superannuation guarantee payment
  2. By you personally via your deductible superannuation contributions.

A cap exists on the maximum amount you may direct into your superannuation at the concessional rate of tax annually. Currently, that cap is $25,000.

Until recent changes in the regulations, your cap reset each year. If you didn’t contribute the entire $25,000 into superannuation that year you forfeited your access to the unused amount. However, you are now allowed to carry forward those unused superannuation contributions for a maximum of five years.

Concessional Contribution Eligibility

The rules governing these catch-up additional superannuation contributions are:

  1. Eligibility for concessional superannuation contributions applies to those with a superannuation balance of under $500,000 as of June 30 in the previous fiscal year
  2. The new carry-forward period of five-years commenced on 1 July 2018 meaning the 2019-2020 financial year is the first year you are allowed to use your untapped superannuation contribution cap to make additional concessional superannuation contributions
  3. A work test rule continues to apply for those aged 65+
  4. The standard notice requirements remain in force for personally deductible contributions
  5. Unused concessional superannuation contributions may now be carried forward for up to five years whatever your total superannuation balance happens to be but expire following that time.

These new provisions may prove especially helpful for people who have gaps in their working careers. This will enable them to catch up with their total potential superannuation contributions. It will also assist people nearing retirement age to optimise their savings towards their retirement while minimising their tax obligations.

Additional Strategies To Turbo-charge Your Super

Other investing strategies for growing your superannuation to fund your retirement include:

  • Making super contributions for a spouse on a lower salary enabling you to qualify for a tax offset
  • Access government co-contributions if your earnings fall below a set income threshold
  • Contribute up to $100,000 towards your superannuation fund as a non-concessional after-tax contribution. For those under age 65, you can bring forward two years of this cap, enabling you to contribute up to $300,000 in a year.

Everyone’s superannuation situation is different. Growing your super can be one of the smartest investment decisions you can make to provide for your retirement. So, wherever possible look to boost your savings. However, the regulations governing superannuation are complex. Check to see how the recent changes affect you and always seek qualified, professional advice.

The team at Endorphin Wealth Management is happy to assist with helping you achieve your financial goals.

For an obligation free discussion, call us on 03 9190 8964, or schedule a meeting at endorphinwealth.com.au/contact/