Financial Year End Considerations

As the end of the financial year looms towards us, we should take a second to ensure there is nothing actionable with super that could help before the year end.

As the year draws to a close, it’s crucial to consider your contributions and make strategic moves to optimise your superannuation benefits. Understanding the two main types of contributions—concessional and non-concessional—is key. Let’s delve into the details and explore the smart strategies to make the most of your contributions.

Concessional contributions, which include employer contributions and salary sacrifice, are subject to caps. To ensure you stay within the limits, let’s take a look at the 2023 caps for contributions:

Concessional Contributions27,500
Number of years carry forward is available2019-2023 (5 years)

Now, here’s where it gets interesting. You may have the opportunity to leverage the unused concessional bring-forward rule. This rule allows you to contribute more than the annual cap by using any unused portion from the previous year. However, keep in mind that your total super balance should be below $500,000 to be eligible for this advantage.

On the other hand, non-concessional contributions, such as personal contributions made from your after-tax income, have their own set of rules. Take note of the following:

Non-Concessional Contributions110,000
Three-year bring-forward330,000

It’s important to consider your total super balance when it comes to non-concessional contributions. If your balance exceeds $1.7 million, you won’t be eligible to make non-concessional contributions. If you are looking to make use of the three year bring forward rules, this threshold is even lower. 

The 2023 financial year brings good news for those considering non-concessional contributions. The work test declaration is no longer required, allowing individuals up to the age of 75 to strategically contribute to their super funds. This change opens up new opportunities for maximizing your super savings.

As we approach the end of the financial year, it’s worth noting that certain thresholds will change after July 1, 2023. To fully capitalize on the upcoming year, it’s wise to implement strategic moves before June 30. Here are some tactics you may consider:

  • Super Splitting Contributions: Optimize contributions between spouses to equalize super balances and potentially reduce tax implications.
  • Re-contribution Strategies: Explore options to withdraw from your super as a lump sum and re-contribute it as a tax-free component, potentially reducing tax on future earnings.
  • Super Balancing Between Spouses: Assess the advantages of balancing super balances between partners, taking into account tax implications and access to benefits.

While maximizing contributions is crucial, don’t forget about meeting the minimum pension requirements. Compliance is essential to ensure you maintain any exempt current pension income you may have. Be diligent in meeting these requirements to safeguard your pension income.

As you can see, with all of the options available, now is the time to seize strategic opportunities and optimize your super contributions. These options can have a significant impact on your future financial well-being. If you’d like personalised guidance on the best strategies for your situation, our team is here to help. Reach out to us, and let’s discuss the possibilities together.

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