By making after-tax (non-concessional) contributions to your super, you can boost the balance – and you won’t have to pay tax again when you withdraw it.
Why should I make after-tax contributions?
If you have maxed out your pre-tax (concessional) contributions to super and still want to contribute to your super fund, an after-tax (non-concessional) contribution might be an option. It can be done as a lump sum or as an ongoing request that is organised through your employer payroll.
Contributions that have already been taxed will not be taxed again when you contribute it to or withdraw it from your super, however investment earnings may be taxed depending on your age.
You might have a large amount of income from an inheritance or the sale of assets like shares or property. Putting that money into super makes it work hard for your future.
As an added bonus, there may be government co-contribution benefits available if you make non-concessional contributions for yourself.
Are there limits to how much I can contribute?
If you’re under 65, there is a cap of $100,000 per year however you can use a ‘bring forward’ rule to contribute up-to $300,000 in a single year, however you will not be able to make any additional non-concessional contributions for 3 years.
Additionally, in order to make a non-concessional contribution your total super balance must be below the general transfer balance cap at the end of the previous financial year ($1.6 million for the 2017-18 financial year). To learn more, visit the ATO website.
If you’re between the ages of 65 and 74, you can’t use the ‘bring forward’ rule and you must fulfil a work test that shows you were employed for at least 40 hours over a consecutive 30 day period.
If you’re 75 and older, you aren’t eligible to make after-tax contributions.
Can I make a tax deduction on my after-tax contributions?
If you are under the age of 75, you can claim a tax deduction for personal payments made to a complying superannuation fund up to $25,000 – this includes employer contributions, salary sacrifice and any personal contributions for which you claim a tax deduction. You will need to advise the super fund of the amount you intend to claim as a deduction. If you’re between the ages of 65 and 74, you will need to meet the work test rules described above.
Other contribution options
Voluntary after-tax contributions
Get detailed information about the different contribution options and how you can optimise your situation with a meeting with our financial advice team. Click here to schedule a call.