Accounting + Taxation | Wealth Creation

Are super contributions part of your tax planning?

Are super contributions part of your tax planning?

MB+M’s Wealth Creation team discuss the importance of superannuation contributions for tax planning + potential tax deductions

As the end of the financial year draws closer, as an investor, you may be considering strategies to boost your super balance. Putting additional funds into your super is an effective tax planning tool that could be a good solution.

There are limits on how much you can contribute to super and claim a tax deduction, it’s important to understand the Concessional Contribution Cap. The concessional contributions cap is the maximum amount you can contribute to your super before tax without incurring additional penalties. It is currently $27,500 for the 2023 financial year.

Keeping a close eye on your concessional contributions is essential. This includes both compulsory contributions from your employer and any additional voluntary contributions you make. It’s particularly crucial for individuals with multiple sources of income or super funds to ensure they stay within the cap limit.

You can check your contribution balance at ATO online services. However, the most up-to-date information can be obtained by calling your superannuation fund or logging on to your superfund online.

Understanding the deadlines for contributions is equally important. Employers have until July 28th for super guarantee contributions. While personal contributions should be made by mid-June to ensure your fund receives them before the contribution cut-off dates. (Cut-off dates can be confirmed by contacting your superannuation fund directly or may be advertised on your superannuation fund website).

Carry forward unused amounts

Unused concessional cap amounts from previous years can be carried forward for up to five years, provided your super balance remains below $500,000 at the end of the previous financial year.

Are you nearing the super cap?

If you’re worried about going over the cap, you may wish to stop any further voluntary contributions based on an assessment of the extra tax you will pay.

For those with two or more employers, you may opt out of receiving the super guarantee from one of the employers.

In the event of exceeding the cap or facing special circumstances, seek guidance from your advisor or the ATO. Excess contributions are typically taxed at your marginal rate, although you can withdraw up to 85% from your super to cover the tax liability.

Timing is everything

The upcoming Stage 3 tax cuts, which commence on 1 July 2024, may affect the value of your concessional contributions. For some, tax benefits may be greater if contributions are made before the tax cuts begin. Please check with us about your circumstances to make sure you make the most effective move.

Super contributions are not something we suggest you do on your own because you may trigger the concessional caps or your addition could have other adverse tax consequences. Please speak with your advisor about the best next steps for you.

Want more articles we have written about superannuation? Check them out here: When was the last time you did a super health check?, Mortgage VS super VS interest rates, Salary sacrifice to boost your super

Make an appointment

Our Authorised Reps would love to talk to you.  OzPlan Financial Services are currently offering an initial free meeting to discuss your personal situation. There is no obligation attached.  Give us a call on 5831 1233 or email to request an appointment today. 

Published 14 May 2024.
The information provided in this article is general in nature only and does not constitute financial advice.