Contributions strategies

Contributions strategies

You might already be making extra contributions into super, but there are some extra benefits you might not know about that could help you (or your partner) save even more.

Contribution limits 

Both before and after-tax contributions have limits (known as caps).   Any amount over these caps will be subject to extra tax.

There are other ways you can get more money into your super before you retire if you're eligible. We take you through these strategies below.

Money directly from you wages

Carry-forward contributions

The concessional contributions cap (before-tax) is $27,500 for the 2021/22 financial year, regardless of your age. 

If you don’t use the full amount of your concessional contributions cap,  you can carry-forward the unused amount and take advantage of it up to five years later (from 1 July 2018). You can only do this if your total super balance (across all super funds) is less than $500,000 on 30 June the previous financial year.

For example, if you have two super accounts which, in total, have a balance of less than $500,000 on 30 June 2021, and you received $10,000 in before-tax (concessional) contributions in the last financial year (2020/21), the $15,000 portion of your cap that is unused is effectively rolled over and added to your concessional cap for the current financial year (2021/22). This means that you’d be able to receive up to $42,500 ($15,000 plus $27,500) in before-tax contributions in the current financial year and not exceed your concessional contributions cap.

How do you use the carry-forward rule?

You can ask your employer to pay an extra part of your wages into your super account (on top of the 10% super they already pay). You can choose how much extra you contribute, change the amount or stop at any time.

Learn more about salary sacrifice

Money from your savings or asset

Bring forward rule

The after-tax (non-concessional) contributions cap is at 1 July 2021 $110,000 per year.  If you're under 67 you can contribute up to $330,000 in total over a three-year period, depending on your total super balance (on 30 June of the previous financial year). This is called the ‘bring-forward rule’.

If you're 67-74 you can make up to $110,000 in after-tax contributions each year, provided you passed the work test in that financial year. As the law changed in June 2021 to allow members aged 65 and 66 to use the bring-forward rule, this will apply to contributions made on or after 1 July 2020 only. There’s no bring-forward option if you’re 67 or over.

For example, if you haven't made an after tax-contribution in the last financial year and you receive an inheritance of $200,000 you can put this full amount into super without having to split it across two financial years.

Get a tax deduction if you make a personal contribution

If you’re under 75, you may be able to claim a tax deduction for personal super contributions. You can claim a deduction for personal super contributions if: 

  • you made the contribution to us 
  • you meet the age restrictions 
  • you notify us in writing of the amount you intend to claim as a deduction, and 
  • we then give you written acknowledgement of your notice of intent to claim a deduction. 

The contributions that you claim as a deduction will count towards your concessional contributions cap. If you exceed your cap, you’ll have to pay extra tax on the excess amount. To notify us you need to complete the Notice of intent to claim or vary a deduction for personal super contributions which can be downloaded on the Australian Taxation Office (ATO) website here.

For example, Mark is a sales person earning $80,000 a year. His employer makes Super Guarantee payments of $12,000 a year, which means Mark could contribute up to $13,000 a year before reaching the concessional contributions cap of $25,000. He decides he can afford to make a $10,000 personal after-tax contribution to his super fund.

After $1,500 (15%) of contributions tax deducted, Mark is left with a net contribution to his super of $8,500.

Mark then claims a tax deduction of $10,000 in his tax return, reducing his taxable income to $70,000 for the year (ignoring any other income and deductions). As his marginal tax rate is 34.5% (including Medicare levy), he pays $3,450 less in tax. Keeping in mind the $1,500 he paid in contributions tax, his net tax saving is $1,950.

Contribute to your partner’s super

You can make extra contributions into your partner's super from your bank account. If your partner earned $40,000 or less, you could receive a tax rebate of up to $540. 

For instance if your partner has taken time off work, say to look after your baby, you can top up their super so they can continue to have their balance grow while they're not working, and you receive some money as well!

To contribute to your spouse’s account complete the personal contribution form.

For downsizers

The downsizer contribution scheme gives you a once-off opportunity to significantly increase your super balance beyond the usual limits without being penalised. You can do this by using the proceeds from the sale of your family home and investing it tax-free into your super account, which can help fund your retirement for longer. If you’re 65 or over, you can make a downsizer contribution into your super account of up to $300,000 for individuals or up to $600,000 for couples.

To learn more about the advantages and disadvantages as well as the rules around this scheme visit the Life Moment page here.

For business owners

If you're the owner, or owners of a small business, the capital gains tax (CGT) concession allows you to disregard the capital gain from the sale of active assets used in a small business and contribute the sale proceeds to us (or any complying super fund). 

These contributions are tax-free and aren't restricted by the $100,000 after-tax contribution limit.    

There are a number of eligibility criteria so before going ahead we recommend speaking to your accountant or tax advisor, or you can visit the ATO website to learn more.

Not sure which contribution strategy might suit you?

Speak to one of our experienced financial advisers who can help at no extra cost to you.

Request a callback

Advice about your super is included as part of your membership.

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