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 2021/22 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 2021/2022?
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 2021/2022
The Concessional contribution cap is $27,500 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.
The Non-Concessional contribution limit is $110,000 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 $330,000 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 $110,000.
Exceeding the Concessional contribution cap or Non-concessional contribution cap may result in Excess Contributions Tax.
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 67, 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.
However, retirees aged between 67 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.
Home Downsize Proceeds Contributions
From 1 July 2018, individuals over age 65 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.
Downsizer 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 $1.7 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.
|2021-2022||Concessional||$27 500||Plus carried-forward unused cap amount if balance under $500k|
|2021-2022||Non-Concessional||$110 000||Or $330k using bring-forward rule|
|2021-2022||Downsizer||$300000||Home owned for 10 years+|
As you can see in the table above, each person could theoretically contribute up to $657,500 in one financial year using the bring-forward rule and home downsizing provisions (plus any unused carried-forward Concessional contribution caps).
Maximum Super Contribution Limit Considerations
All employer contributions made to your super account will count towards your Concessional contribution 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 via the low income super tax offset.
You should always be aware of how much you can contribute to super based on your age and other factors.