Hello All,

We are about 5 weeks away from the end of the financial year so I thought I’d quickly send out a reminder for those looking to top up their super contributions and reduce their income tax bill for the 21/22 financial year. Super contributions can be topped up in a number of ways:

• If you are self employed, you can directly contribute up to $27,500 to a super fund, in a given financial year, and receive a tax deduction for the amount.
• If you are not self employed, you can also contribute up to $27,500 to a super fund, in a given financial year, but you have the option of either setting up a salary sacrifice arrangement with your employer or you can personally contribute.

For employees however, one important thing to note is that your employers 10% superannuation guarantee is included in that $27,500 per annum figure. For example, let’s say you are an employee on $100,000 per annum, your employer would have to kick in $10,000 in super contributions. This means you can only contribute a further $17,500 in the given year ($27,500 – $10,000).

Lastly, since 1 July 2018 people who have not contributed up to the maximum amount of tax deductible contributions i.e. $25,000 (2018-2021 financial years) or $27,500 (2022 financial year) can carry forward unused tax-deductible contributions for a period of 5 years and in that 5-year period make a catch-up contribution/s to get a tax deduction for it on top of any other tax-deductible super contributions made in a particular year.

A simple example is if your contributions totalled $10,000 in the 2020 financial year, $10,000 in the 2021 financial year and $10,000 so far in 2022 financial year, you could contribute an extra $47,500 in tax deductible contributions in the 2023 financial year on top of the maximum $27,500 allowed. Or you could spread that $47,500 over 2023, 2024 and 2025 on top of the maximum tax-deductible contribution of $27,500 per annum.

If anyone would like to discuss topping up for the 2022 financial year or making catch up contributions, please email me or give me a call.

Regards

David