Tomorrow is the last day of the financial year, and therefore, the last day you can make tax-effective contributions to your superannuation, at least until next financial year, that is.
But to make a so-called concessional contribution, you'd most likely need to transfer the money into your superannuation account today so it appears there tomorrow. It would pay to check with your bank and superannuation fund to see whether the transfer will arrive in time.
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So how much can you contribute, and why should you?
Each year, individuals can contribute $30,000 as concessional contributions, which are taxed at just 15%.
For salary earners, the amount contributed into superannuation by their employer counts towards the $30,000 cap.
Extra contributions made by an individual are taxed at 15% and can be claimed as a tax deduction. In most cases, this means your overall taxable income, and therefore tax paid, will be lower.
It's possible to track how much you've contributed as concessional contributions, and hence how much extra you can put in, by checking the ATO's online services. Some super funds also list this information.
If you do put extra into your super and want it to be a concessional contribution, you also need to lodge a notice of intent to claim. This alerts your super fund that it is a concessional contribution, and they will take the 15% tax out as necessary.
How to make an even bigger contribution
Of course, you can always wait until next financial year to put money in, but there's a good reason to check you're not missing an opportunity, particularly if you have a large lump sum you can contribute.
Specifically, unused concessional amounts can be used, going back up to five years, as long as you have less than $500,000 in super at 30 June of the previous financial year.
As the ATO website explains:
If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years. The oldest available unused cap amounts are carried forward first. For example, unused cap amounts from 2019–20 would be used to increase your cap first before unused cap amounts from 2020–21. Unused concessional cap amounts are applied automatically once you exceed the cap in any year.
Once you've used up any concessional caps it is also possible to make non-concessional contributions of up to $130,000 per year.
While the strategies outlined in this article might be useful, they might not be for everyone, and this article does not constitute financial advice. It's always prudent to consult a financial adviser when setting up a new investment strategy.
