Knowing how much you can put into superannuation each year is important if you are looking to maximise your super contributions.
Every year, there are changes to superannuation rules, contribution caps and various thresholds.
This post is going to explain how much you are able to put into super as a lump sum in the 2018/2019 financial year.
It should be noted that it does not matter whether the contributions you make into super are lump sums or regular period contributions throughout the year, because the same contribution limits will apply.
Most people wait until May or June to make voluntary contributions into their super account. However, a benefit of making contributions to superannuation earlier in the financial year (July/August) compared to later in the financial year (May/June) is that more of your wealth can be held in the tax effective superannuation environment for longer.
This way all earnings from your contribution amount are taxed at a maximum of 15% throughout the year, as opposed to being taxed at your individual marginal tax rate.
How Much Can I Put Into Super in a Lump Sum 2018/2019?
The two categories or types of contributions that can be made into superannuation are Concessional contributions and Non-Concessional contributions.
Concessional contributions include Mandatory Employer SG contributions, Salary Sacrifice contributions and Personal Concessional contributions.
Non-Concessional contributions are after-tax contributions paid from your personal bank account into super.
Concessional contributions are called ‘concessional’ because the contributor receives a tax deduction for making the contribution.
Non-Concessional contributions are called ‘non-concessional’ because a tax deduction is not claimed for the contribution. These contributions are made with after-tax savings.
Both Concessional and Non-Concessional contributions have annual caps or limits on the amount that an individual can receive into their account each financial year.
If an individual has more than one super account, the combined contributions to all accounts will count towards the relevant cap. That is, the contribution limits apply per person, not per account.
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Super Contribution Limits 2018/2019
The Concessional contribution limit is $25,000 per financial year for everyone.
Exception: If you have a superannuation balance or combined balances of less than $500,000, you are able to use the carry-forward concessional contributions of unused caps, which allows you to use up the unused caps from previous years over a 5-year rolling period. The accumulation of unused caps begins from the 2017/2018 financial year.
The Non-Concessional contribution limit is $100,000 per financial year for everyone.
Exception: While under age 65, you are able to utilise the Non-Concessional contribution ‘bring-forward’ rule. This allows you to bring-forward up to to additional years worth of the cap; meaning you can contribute up to $300,000 over three financial years at any time, with complete disregard for the annual cap.
The bring-forward rule is automatically triggered in the financial year that your Non-Concessional contributions exceed $100,000. Click here to read more.
Superannuation Changes July 2018
There were some very significant and comprehensive superannuation rule changes on 1 July 2017. Further super rule changes were also made on 1 July 2018 for the 2018/2019 financial year.
Superannuation Work Test Changes
In order to make or receive any type of contribution into your superannuation account when over age 65, you will need to meet the Superannuation Work Test. The Superannuation Work Test involves working 40 hours over 30 consecutive days in the year that you make the contribution and prior to making the contribution.
This rule still stands; however, from 1 July 2018, retirees aged between 65 and 74, with a super balance below $300,000 are able to make voluntary Concessional and Non-Concessional contributions for the first financial year that they do not meet the Superannuation Work Test.
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Home Downsize Proceeds Contributions
From 1 July 2018, individuals are able to contribute up to $300,000 of proceeds that have resulted from the sale of a principal residence that they have held for at least 10 years.
‘Home Downsizing Proceeds’ contributions do not count towards the standard Concessional and Non-Concessional contribution caps and can still be made even if your super/pension balance exceeds $1.6 million.
How Much Can I Put Into Super As A Lump Sum?
The table below details the maximum that can be contributed into super in any one year.
|2018-2019||Concessional||$25 000||Plus any unused caps over 5-year rolling period|
|2018-2019||Non-Concessional||$100 000||Or $300 000 using bring-forward rule|
|2018-2019||Home Downsize Proceeds||$300 000||Home held for 10 years|
As you can see in the table above, each person could contribute up to $625,000 using the bring-forward rule and home downsizing provisions (plus any unused Concessional contribution caps).
Maximum Super Contribution Limit Considerations
All employer contributions made to your super account will count towards your Concessional contribution cap.
The home downsizer contribution will count towards your transfer balance cap.
All Concessional contributions will have Contributions Tax of 15% deducted from the amount contributed. However, high income earners may incur additional contributions tax and low income earners can have the contributions tax refunded.
You should always be aware of age limits for superannuation contributions.