Can I contribute as much as I like to super?
Yes, and no. While it sounds like a great idea to put money away for the future, the ATO is a little touchy about us all putting loads of money into a place that pays less tax!
Therefore while there is technically no limit to the amount you can contribute to super, if you go above the contribution limits they have in place you may be personally liable for additional tax.
Can I contribute above what my employer pays into super for me?
If you are employed, then there are two way you can contribute extra to super above the 9.5% your employer is generally required to pay into super for you:
- you can ask your employer to deduct extra money from your pay (before tax is taken out) and pay this into your super account - this is called salary sacrificing
- you can contribute using your own savings, which is called a non-concessional contribution, because your don't receive a tax deduction for the contribution.
What are the limits?
The contribution limits for employees depends on the type of contribution you want to make.
- Concessional contributions have a cap of $25,000 per annum. These contributions include employer contributions and salary sacrifice contributions, amongst others.
- Non-concessional contributions have a cap of $100,000 per annum. These are contributions made out of your own savings.
Once you have reached age 65, you will need to work at least 40 hours in 30 consecutive days in the financial year should you wish to contribute to super yourself. And once you reach age 75, you aren't able to add to your super yourself.
What if I go over the limit?
Amounts over the limits are subject to additional tax, so it is a good idea to ensure you will be under the limits before you make any payments.
Does it get more complicated than this?
Absolutely. If you are no longer working, or self employed, or a high income earner, or a multitude of other factors, then the tules around what is possible to contribute into super have more layers than what we have outlined above.
What should I do if it seems more complicated?
First of all, you need to ensure you have sufficient time to get some help and then put things in place. If it is already June and you feel like you have might be a complicated case, then getting it all sorted this financial year may be a big ask.
Secondly, there are a number of places to get more information. You can call you super fund directly to found out how much you have already contributed, or to do more research into what might be possible.
Alternatively you can ask the Caboodle Advice team for assistance. We can help clarify the limits that apply to your specific situation or even provide you with a quote for pulling together a tailored plan of attack on how you can contribute more to super over time to build that retirement nest egg.
To find out more simply give us a buzz at Caboodle Financial Services on 1300 652 944 or click below:
WARNING: I know I don't need to say this, but this information is not tailored to your personal situation. It is designed to be of a general nature and get you headed in the right direction. It therefore hasn't taken into account your personal objectives, financial situation, or personal needs.
You therefore need to either assess whether it is appropriate to your personal situation on your own, or ask an adviser to provide advice that is tailored to your personal situation.