When it comes to topping up your super, the time is now. Superannuation is a long term investment that thrives on a little short term focus.
The benefits of investing extra in your super (and self) today will pay dividends in the years to come. Plus, it just feels really damn good to know that you’re taking an extra step to financially support future you, today.
Want to learn more about why investing a dollar today is worth more than a dollar tomorrow? Read our article on the power of compound interest.
Deciding how much to contribute to your super is personal and depends on several factors such as your income, how long you have until retirement, and your personal tax requirements. That’s why it’s important to know what your goals are for retirement savings and to have a plan for how to reach your goal. It’s also important to familiarise yourself with how the superannuation rules will apply to you.
The good news is that once you have a routine in place, the process of making additional personal contributions is simple.
Let’s start with the basics. There are broadly two types of contributions that you can make to your super: concessional and non concessional.
Concessional Contributions (Pre-tax and tax deductible contributions)
Concessional super contributions are payments put into your super fund from your pre-tax income or contributions you make that are tax deductible. Making additional concessional contributions to your super can be a great way to top up your balance and reduce your tax (if you earn over $37,000 per year).
Concessional contributions can include: the superannuation your employer pays under the super guarantee (SG), additional contributions made by your employer through a ‘salary sacrifice arrangement’, contributions that you make as a self employed person and other personal contributions you make.
There is an annual limit of $27,500 for this type of contribution. It’s up to you to keep an eye on whether or not you have reached this cap. As of July 1, 2018 you can carry forward any unused amount of your cap from the current year, for up to five years — if you have a balance of less than $500,000 on 30 June of the previous financial year. This is known as the ‘Carry forward rule’.
To make additional concessional contributions, you can either organise a ‘salary sacrifice agreement with your employer, or if you’ve already paid income tax on these funds you may be eligible to claim some of the tax back.To make a tax deductible personal contribution, first check your eligibility, make the payment and notify your superannuation fund with a Notice of Intention to claim. Here is how to make a claim.
You can learn from the ATO on salary sacrificing here.
Low-income superannuation tax offset
If you earn $37,000 or less, you may get a ‘low-income superannuation tax offset’ (LISTO) from the government. The amount, up to $500 annually, will be 15% of the concessional contributions you or your employer made to your super account during the financial year. You don’t need to do anything, the ATO will work out your eligibility and pay your low-income super tax offset directly into your super account. Make sure your super fund has your tax file number (TFN) so you don’t miss out on the payment.
Non Concessional Contributions (from your post tax salary or money from your spouse)
Non concessional contributions include payments made by you from your post-tax salary or spousal contributions. The cap for these contributions is currently $110,000 if your total super balance is less than $1.7 million or $330,000 over a 3-year period if you are aged under 65 under the ‘Bring forward rule’.
To make an additional non-concessional contribution, simply deposit your personal money into your super (if you’re a Verve member keep reading, we tell you how). Although you will have already paid tax on this income, there are still some potential benefits to making additional contributions including a lower tax on investment earnings and potential government co-contributions.
There is no need to notify the Australian Tax Office, however, you still need to stay within the non concessional cap and eligibility requirements.
Now we know how payments are categorised and the associated limits. Here are some of the ways you can go about topping up your super:
How to make a Personal contribution at Verve?
To make personal contributions you can login to your online portal (if you forgot your password just select reset), from here select the menu item in the top right and then select “Make a personal contribution”. Complete this online form and follow the payment instructions to complete transfer. You can make a once off lump sum payment or set up a recurring transfer. Easy! If you have any questions please call 1300 799 482 or email email@example.com.
Navigating the super contributions system can be a challenge and at times it feels like a rabbit hole of information. We’re big believers in using knowledge as power and as a big ol’ confidence boost. If you are looking for more information on super contributions, you can learn through our free Verve Academy course on superannuation or get in touch and we’ll give you a hand!
You can reach Verve on 1300 799 482 or via firstname.lastname@example.org.
*Please note any information provided is general in nature and should not be considered personal financial advice. We recommend you speak to a qualified financial adviser for personal advice.
**Please confirm you are eligible to make contributions to Verve Super.
***Please note this contribution will remain preserved until a condition of release occurs, such as retirement after reaching preservation age.