As most of you already know there are two ways to contribute to superannuation before tax, these are known as concessional contributions and after tax, and these are called non-concessional contributions. Both these types of contributions are subject to caps set by the government.
The changes are as follows:
As of next financial year (starting July 2021) the concessional contribution cap will increase from $25,000 pa to $27,500 pa. Note this cap includes the contributions made on your behalf by your employer. The non concessional cap will increase from $100,000 pa to $110,000 pa. In addition, the maximum amount a member who was under 65 at the start of the financial year can contribute under the non-concessional contribution cap bring-forward rule was also increased from $300,000 to $330,000 from 1 July 2021.
To refresh your memory the bring forward rule allows you to make up to three years’ worth of non-concessional (after-tax) contributions to your super in a single income year. Please note it is a bit more complex than just this and you do need to meet other conditions as well. Let me know if you would like to discuss it further.
There are also changes to the $1.6m non concessional cap threshold due to the increase of the general transfer balance cap on July 2021 to $1.7m. This cap stops you from making non-concessional contributions if your balance is over $1.7m on the 30th of June 2021. If you wish to know more about how this works, please let me know.
Deciding when, how and how much to contribute to super is complicated. There are many rules! If you want to find out what is appropriate for you, please seek further advice and contact us on [email protected].
Advice Warning: The information in this communication is provided for information purposes and is of a general nature only. It is not intended to be and does not constitute financial advice or any other advice. Further, the information is not based on your personal objectives, financial situation or needs. You are encouraged to consult a financial planner before making any decision as to how appropriate this information is to your objectives, financial situation and needs. Also, before making a decision, you should consider the relevant Product Disclosure Statement available from your financial planner.