Superannuation is one of the most tax-effective retirement savings and investment vehicles around, and with about six weeks to go until the end of the financial year, it's time to start thinking 'strategy'.
One of the best ways to harness the 'miracle of compounding' is to add more funds to your superannuation every year.
And if you do it by 30 June, you can collect a handsome tax break on your FY24 income, too.
There are also other ways you can boost your superannuation balance before the end of the year.
Helpfully, Vanguard Australia has outlined five easy ways to get more money into your super by 30 June.
You may know Vanguard as the global pioneer of index funds. The company is also one of the biggest ASX ETF managers in Australia and launched an Australian superannuation product in November 2022.
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5 ways to boost superannuation before EOFY
Make extra concessional (pre-tax) contributions
For FY24, you're allowed to have up to $27,500 in concessional (pre-tax) contributions paid into your superannuation account. This includes your employer's compulsory Superannuation Guarantee payments, any salary sacrifice amounts, and any additional money you deposit yourself as a personal contribution.
Concessional contributions are taxed at 15% instead of your marginal tax rate. So, if you deposit $10,000 of your after-tax income into superannuation, you'll be able to claim a tax deduction on your tax return.
There are forms involved to get all this organised, so get cracking on this task well before the EOFY.
Make use of carry-forward (catch-up) concessional contributions
You may be able to contribute more than the annual cap of $27,500 in concessional contributions if you have carry-forward concessional contributions available to use.
Carry-forward contributions are unused concessional contributions from the previous five financial years.
This measure was introduced in FY19, which means any unused concessional contributions you have from the FY19 year must be used in the FY24 year, or they'll be lost forever!
Vanguard's Tony Kaye explains:
For example, if $15,000 in employer and personal concessional contributions were made into your super account in 2018-19, you may be able to take advantage of your unused $5,000 gap from that financial year (the maximum concessional contributions limit was $20,000 in 2018-19) and roll it over into this financial year's contributions.
This $5,000 would be in addition to the maximum $27,500 in allowable concessional contributions that can be made this financial year (allowing you to contribute up to $32,500 in this example).
Carry-forward contributions are only available for superannuation accounts worth less than $500,000.
You can find out how much you have available in carry-forward concessional contributions by visiting the ATO portal via MyGov.
Make non-concessional (after-tax) contributions
Non-concessional contributions are after-tax personal contributions that can't be claimed as a tax deduction. The non-concessional contributions limit is $110,000 per financial year.
Home downsizer contributions
This contribution of up to $300,000 per person doesn't have an EOFY deadline. But you have to do it within 90 days of receiving the proceeds from the sale of your home. (Kaye notes that the ATO will allow for a longer period if there are circumstances beyond your control.)
The downsizer superannuation contribution is an option available to Australians aged 55 or older.
They must have sold a home they have owned and lived in for at least 10 years. If a couple owns the home, they can both contribute $300,000 to their superannuation funds.
The downsizer contribution is a non-concessional contribution but doesn't count toward the non-concessional contributions annual cap.
Once again, there are forms to fill in, and you'll find them here.
Spouse contributions
If your superannuation fund allows it, then ATO rules give couples the option to split up to 85% of their annual concessional contributions.
The maximum amount you can apply to split is the lesser of 85% of your concessional contributions for that financial year, or 85% of the concessional contributions cap for that financial year.
Find out how much superannuation you need for a comfortable retirement lifestyle in Australia today.
