Chartered accountant Gail Freeman helps people make the most of super changes. This is a sponsored post.

Julie came to see me, keen to find out how much money she could contribute to superannuation in the light of changes from July 1. 

I told her that until June 30 she could contribute $25,000 a year as a tax-deductible amount.

“That’s called a concessional contribution,” I told her.

“It includes your employer’s contributions and any contributions that you personally make. If your employer contributes $10,000 you can contribute $15,000 before June 30 and you are still within the concessional contribution cap.

“You don’t want to exceed this cap or you will have to pay excess concessional contributions tax. So always monitor the total amount that you have contributed. This cap will increase to $27,500 from July 1.

“There are two other good things that go along with this. Firstly, you can contribute without satisfying the work test until you are 67. Secondly, since July 1, 2018, you can make catch-up contributions.

“This means that if you did not contribute the full $25,000 in the previous year you can contribute the shortfall this year provided that your total superannuation balance is less than $500,000.

“I have checked your superannuation account and you have $45,000 available to you to use as a carry forward. These contributions carry forward for five years. At the end of five years, the first year drops off so it is a good idea to plan to ensure that you can maximise your concessional contributions until your total super balance reaches $500,000.”

Julie was pleased at the prospect of being able to contribute more in the future and use the historical shortfall of contributions to increase her super.

Then there are other changes, such as an increase to the amount Julie can put in as non-concessional contributions.

“Those are the contributions for which you do not get a tax deduction,” I told her.

“The cap is $100,000 until June 30, increasing to $110,000 from July 1. “You can also bring forward up to three years of non-concessional contributions. If you need to exceed the $100,000 you can put in up to $300,000. But then $0 for the next three years. From July 1, you can put in $330,000.”

Julie said she was thinking of selling an investment property and expected to have some surplus cash, and perhaps she should wait until after June 30 to put in a larger amount.

“Actually, you could put in $100,000 this financial year and then next financial year, $330,000,” I replied.

The total maximum superannuation balance is also increasing from July 1 from the current $1.6 million to $1.7 million.

“Your superannuation balance is well below this and you are not planning to retire at this point, but it is important to monitor going forward,” I said.

Julie was happy with my advice, saying: “I’m really pleased to find out that we can put more money into super and we can contribute from the sale of the rental property.”

If you need guidance on superannuation deductions, the balance caps, or any other superannuation related matter contact the friendly team at Gail Freeman and Co on 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer

This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser.