#7: Is it possible to contribute large sums of money to super anymore?

While superannuation is considered one of the most tax-effective investments for creating wealth, making large contributions to super has become more difficult over the last few years due to a number of rule changes. However, downsizer contributions, carry-forward contributions and the bring forward rule could be options that could help you to boost your super in the lead up to retirement.

Downsizer contributions

If you are over 60 years of age, downsizer contributions allow you to contribute an after-tax contribution of up to $300,000 to your super from the proceeds of selling your home. A couple may contribute a total of $600,000. There are no restrictions on purchasing a smaller house and you don’t even need to re-enter the property market. Benefits of the incentive include:

·         You don’t need to be working to make a downsizer contribution

·         As a couple you can contribute up to $600,000 to your super

·         Downsizer contributions are not included in your after-tax contribution cap

·         There is no upper age limit for making a downsizer contribution

·         You don’t actually need to downsize or re-enter the property market

Find out more about in our ‘Downsizing to upsize retirement’ case study.

Pre-tax carry-forward contributions

Carry-forward contributions enable you to carry-forward unused annual concessional (pre-tax) contribution limits for up to five years. Concessional contributions include employer’s Super Guarantee payments, salary sacrifice contributions or any other personal contributions where a tax deduction is claimed.

The 2018-19 financial year was the starting year for accrued unused cap amounts, and to be eligible for catch-up concessional contributions you must have a super balance less than $500,000 at 30 June in the previous financial year.

The bring forward rule – after-tax contributions

The bring forward rule also enables you to bring forward three years of non-concessional (after-tax) contributions in one financial year. Eligible members can contribute non-concessional contributions of $110,000 per annum, or up to $330,000 (depending on your overall superannuation balance) in a single year if utilising the bring forward rule. If you take advantage of the bring-forward rule, you can only contribute non-concessional contributions again once the next three-year period expires.

If you would like further advice about making the most of your superannuation, I encourage you to contact our office on 07 3720 1299 or email admin@wealthfundamentals.com.au

Lane Moses Pty Ltd ABN 56 092 186 117 trading as Wealth Fundamentals and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.

This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decisions.

This publication cannot be reproduced in any form without the express written consent of the author.