How Much Can I Put Into Super As A Lump Sum?

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 2020/2021 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 2020/2021?

 
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

Concessional contributions are called ‘concessional’ because the contributor receives a tax deduction for making the contribution.

Non-Concessional Contributions

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 2020/2021

 
Concessional Contributions

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 also able to utilise your carry-forward unused concessional contributions, 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 2018/2019 financial year.

Non-Concessional Contributions

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 two 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.

Exceeding the Concessional contribution cap or Non-concessional contribution cap may result in Excess Contributions Tax and the Excess Concessional Contribution (ECC) Charge.

If you exceed the non-concessional contribution cap, you have options as to how you would like it dealt with.
 

Superannuation Changes

 
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.

Year Contribution Type Amount Notes
2020-2021 Concessional $25k Plus any unused caps over 5-year rolling period
2020-2021 Non-Concessional $100k Or $300k using bring-forward rule
2020-2021 Home Downsize Proceeds $300k Home held for 10 years

As you can see in the table above, each person could theoretically contribute up to $625,000 in one financial year 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.

Chris Strano

Hi, I hope you enjoyed reading this article. If you want my team and I to help with your retirement planning, click here. If you prefer a DIY approach, then check out the SuperGuy HUB. Thanks for stopping by - Chris.

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22 Comments

  1. jeff raw

    I want to rejoice my cash capitial to be able get the dole I would need to put around 60000 70000 to be cash poor enough to obtain the dole I am 63 now an will sell my home an cash my super an cash at 66an half buy a house that will get my assets to my only home then an not shares and cash so as to recive the old age benefit will there be penaltys for with drawing at 60 to by the house that will rejuce my cash assets thanks

    Reply
    • Chris Strano

      Hi Jeff, there are no specific penalties that I can think of for withdrawing your super. Obviously you will be reducing your retirement savings and may find it difficult to recontribute these funds into super due to contribution caps/age in the future. You might consider the risk of having most of your wealth in your home (e.g. no money for emergencies, capital expenses, etc.)

      Reply
  2. Emma

    Hi Chris, I have $200k in super, my husband has $50k. He is retired. I am 62 and still working. We own our home apart from a $45k mortgage that we want to clear. I would like to drop back and just work a couple of days a week. Can I take my super out tax free to pay off the mortgage? Should I transition to retirement to get some money to pay out the mortgage?

    Reply
    • Chris Strano

      You are only able to access lump sums from your super if you have reached your superannuation preservation age (which you have) and met the superannuation definition of retirement or are over age 60. The superannuation definition of retirement includes retired with no intention to return to work or having an employment arrangement come to an end after reaching age 60. Dropping back to part-time work with the same employer will generally not satisfy ceasing an employment arrangement. If your husband no longer intends to work and has reached his superannuation preservation age, or retired from his job after reaching age 60, he might have full access to his super.
      Alternatively, a transition to retirement income stream can usually be started after reaching preservation age, regardless of employment status. However, a TTR income stream limits the amount you can withdraw each year.
      Related Posts
      TTR Pension Over 60?
      What is My Preservation Age
      Can I Access My Super at 60 and Still Work?

      Reply
      • Margot Moyes

        Hi Chris
        If you sell your house ( owned for over 10 years ) and purchase a small apartment to live in ( downsizing )….with the balance of more than $500k put in term deposits….can you, over 15 mths later, still put $300k into your superannuation using the downsizing rule?
        In other words is there a time limit ?

        Reply
        • Chris Strano

          Hi Margot, thanks for your question.
          The timeframe on the downsizer contribution is 90 days from when the sale proceeds are received (usually the settlement date).
          Many super funds have the option of investing all or some of your super balance into term deposits if that is your preference.
          Keep in mind, it is important to invest your super in line with your objectives.
          Feel free to arrange an initial consultation with us to discuss your options if you like https://calendly.com/torowealth/60mincall
          Regards,
          Chris

          Reply
  3. Ben

    So my understanding is that the 25k limit gets taxed at 15% and also the interest earns gets taxed at 15%. Is that right?

    Reply
  4. Kathy

    Hi Chris
    I’m 65 and have little to no super. I’m not working since April 2019. I just received an inheritance of about $200,000. Can I put this in Super ?
    Cheers Kathy

    Reply
    • Chris Strano

      Hi Kathy,
      Usually an individual over age 65 will need to meet the superannuation work test in order to make contributions to super. However, if your super balance was under $300,000 at 30 June on the previous financial year, you could be exempt from the work test for 12-months from the end of the financial year in which you last met the work test.
      You also need to consider contribution cap rules and the type of contribution you would like to make (concessional or non-concessional).
      I suggest seeking personal financial advice. If you do not already have a financial planner, feel free to make an obligation-free 15-minute consultation with us at Toro Wealth here https://calendly.com/torowealth/15mincall
      Regards,
      Chris
      Related Posts
      Superannuation Work Test
      Concessional vs Non-Concessional Contributions

      Reply
  5. derek scotney

    Hi Chris
    I’m 65, unemployed, don’t own a house and have $350,000 in 2 super funds. Am I allowed to contribute $40000 to one of these funds. If not, how much can I contribute.
    Thanks for your time and advice.
    Best wishes
    Derek

    Reply
    • Chris Strano

      Hi Derek,
      An individual aged 65 is able to make a non-concessional contribution to super of up to $100,000 p.a. provided they meet the superannuation work test, or did meet the work test in the previous financial year and have a total super balance below $300k. (any contributions in previous years using the bring-forward rule may reduce this $100k cap).
      An individual aged 65 is able to make concessional contributions to super of up to $25,000 p.a. (plus any carry-forward cap amounts) provided they meet the superannuation work test, or did meet the work test in the previous financial year and have a total super balance below $300k.
      Hope this helps.
      Regards,
      Chris
      Related Posts
      What is a Non-Concessional Contribution
      What is a Concessional Contribution
      Carry-forward Unused Cap
      Bring-forward Rule

      Reply
  6. vicki coulta

    Hi Chris my super fund suggests that i need to add $4000 a year so that my super plus age pension will give me a better retirement income. I am 60 yrs old so for next 7yrs i need to add money. Are lump sum payments the way to go? Thank you Vicki.

    Reply
    • Chris Strano

      Hi Vicki,
      Contributions to super can be made as regular contributions or one-off lump sum contributions each year. Ultimately there is no real difference. One-off contributions might be easier for you – something that you only need to do once a year, but regular contributions might be easier on the management of your personal cash flow. You might also want to look into transaction fees charged by your super fund and see if this is affected either way.
      Also, you should think about which type of contribution you should be making and discuss this with your accountant.
      Regards,
      Chris
      Related Posts
      Concessional vs Non-Concessional Contributions

      Reply
  7. Kristen holloway

    Hi! If I’m aged under 65, can I still add $300 000 into my super tax free from the sale of my own home? Or does this apply to over 65s only?

    Reply
    • Chris Strano

      Hi Kristen, only individuals over age 65 can utilise the home downsizer rule. However, you may be able to utilise the non-concessional contribution bring-forward rule. Just be sure to make yourself aware of the risks.
      Regards,
      Chris

      Reply
  8. Cate

    Hi Chris, my husband has 2 Super accounts and we have put off consolidating them. When he retires, if he accessed the smaller one to use in the first year of retirement, will that trigger the second Super account to be forced into Pension phase?
    Also, I’m saving funds in an ordinary savings account on a fortnightly basis to use before accessing super. We already are both salary sacrificing to the ‘limit’ so thinking this option is the way to proceed so we don’t pay tax on super contributions if it were to be directed there and gives us access to emergency funds if we need. But what are your thoughts on this? We are both 57 and intend to retire in 5 years. The plan is to use the cash for 2-3 years before accessing our super accounts. Do we leave the super in accumulation phase whilst doing that? What are the pros and cons? Or would it be better in 5 years to each add $100K to our separate super accounts and then convert to pension phase? There are so many rules and it’s difficult to work out what is the most beneficial option. Thanks!

    Reply
    • Chris Strano

      Hi Cate,
      Accessing super with one provider does not force access to another. In fact, you are never forced to access your super – it can remain in accumulation phase for as long as you like. Also, there is likely to be better alternatives than building savings up in cash in order to delay accessing your super.

      As you say, there are many rules. However, this is a good thing, because it means there are many options available to you. Without knowing more about you and your situation, it is not possible to say what is best for you.

      From what I can glean from your message, you are in a reasonable financial position and would like to maximise the opportunities available to you leading into retirement and make sure you’re not making any costly mistakes. Based on this, I think it would be beneficial for you to obtain personal financial advice. Because I’m sure the benefit of advice will outweigh the cost. If you don’t already have a financial planner in mind, I encourage you to make a complimentary 15-minute appointment with our firm here https://calendly.com/torowealth/15mincall to see if engaging the services of a financial planner would be beneficial for you.

      Kind Regards,
      Chris

      Reply
  9. stephen podesta

    Hi Chris, both myself and my Partner quit our Jobs exactly one year ago and we have decided to semi retire. We are hoping to just do some part time work just to keep ourselves busy.
    We have just SOLD our home and are wanting to put some money from the sale into our Super.
    How much can we put into each of our Super funds.
    We don’t have a lot in our super about 170k combined most of it is in a pension fund.
    We have 2 investment properties and we owe about 120k on them, they are worth about 1.1 mill combined.
    we don’t have any other debts.
    What is the best scenario with what we should do with our 2 properties, should we sell one and put all the money into our super and if we do what is the maximum we can put into our super.
    We are asset rich but cash poor living on rent from the properties 7820 per week and money from my super about 240 per week.
    I am 62 YO and my wife is 56 yo.

    Reply
    • Chris Strano

      Hi Stephen,
      The general non-concessional contribution cap is $100,000 per financial year and the general concessional contribution cap is $25,000 per year. As you are under 65, you are not eligible to utilise the downsizer rules, but may be able to utilise the non-concessional bring-forward rule and any carry-forward unused concessional caps, if suitable.
      A general response to your other questions would do your situation no justice and requires personal advice.
      It seems like you are in a sound financial position, but just need to figure out the best way to optimise your financial position by minimising tax, managing risk and ensuring you are able to meet your retirement (or semi-retirement) income needs. I would strongly suggest engaging the services of a financial planner, as I am confident the benefits of professional advice from the right person would far-outweigh the cost. If you do not have a financial planner, please feel free to check out our financial planning practice, Toro Wealth, and make a complimentary initial video consultation by clicking here.
      Regards,
      Chris

      Reply
  10. Annie

    Hi Chris, I am 57 yrs old and I just sold an investment property which has made a significant capital gain which will be subject to capital gains tax. Over the past 3 years, I have been in full time employment with a base gross salary of around $87k, which means my employers sgc amts have been around $8265 pa (ie., 9.5% sgc) . I want to offset some of the capital gains with the unused caps of the concessional amts being $25k pa. I understand that this means I can make a further $16,735pa concessional contribution into my smsf pertaining to the past 3 yrs ($25k less $8265 = $16735). So am I right in saying that I can contribute 3 x $16735 = $50205 in the 2020/2021 fin. year, into my smsf, and then claiming a tax deduction (which will offset $50305 of the capital gain)? Is this an acceptable cgt minimization strategy and do I or my smsf have to prepare any minutes/resolutions or lodge any ATO notification forms in preparation for the $50205 concessional smsf contribution into my smsf, and also in claiming this as an allowable tax deduction in my Individual’s tax return? I was also made redundant in Jan 2021 due to covid and I am now looking for another role, which means I could claim more than $50205 as I wont be having sgc being paid probably for the remainder of the 2020/21 fin yr as finding work is difficult at the moment. Is this right? Thanks very much.

    Reply
    • Chris Strano

      Hi Annie,
      Your calculation method is correct. It might be an idea to double check that you did not make any salary sacrifice or personal concessional contributions over this and the previous two financial years (and that you do not have a super-owned insurance policy (external to your SMSF)). Also, to utilise the carry-forward provisions, you need to have had a total super balance below $500,000 on 30 June of the previous financial year.
      As far as documentation goes, your SMSF trust deed should guide you with what is required, as well as the SMSF accountant/administrator. But, yes, minutes would be prudent and you should always keep track of member contribution types, dates and amounts.
      I am unable to comment as to whether this is an appropriate strategy for your situation. You may consider seeking personal financial advice in relation to this. If you do not have an adviser, please feel free to check out our firm, Toro Wealth.
      Regards,
      Chris

      Reply

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