Nick Bruining: How to top up your superannuation at the end of the financial year and get stacks back on tax

May has traditionally been the month where accountants and financial advisers get their clients in to discuss and weigh up end-of-year tax strategies. It provides plenty of time to gather the required information and to implement any changes ahead of the June 30 deadline. By far the most effective and simple strategies are centred around superannuation and, in some cases, the benefits of the strategy are realised in just a few weeks. That’s when you lodge your tax return and, hopefully, get a boosted refund. It’s a confusing mess of rules and regulations but if you follow our checklist, you’ll have most bases covered. As a starting point, you need to know where you stand with your super regarding account balances, contribution caps and carry-over and bring-forward contribution limits. A call to your accountant or adviser can achieve that, but normally with an associated bill for the time spent. The good news is that free help is at hand. Given the Australian Taxation Office ultimately decides whether something’s permissible or not, getting the information straight from the horse’s mouth is the best option. You do that via the superannuation drop-down menu under the ATO service, accessed through my.Gov.au You’ll see that the ATO systems have already calculated how much you can contribute, how much of your contribution caps are still available and the balances being used to determine eligibility for all the tricks we’re about to explain. Concessional contributions are those payments where someone claims a tax deduction. Usually it’s the boss for compulsory super and salary-sacrificed arrangements or you, if you’re making a personal contribution that you want to claim a tax deduction for. These contributions cop a 15 per cent contributions tax. The current concessional contribution limit is $30,000 for the 2024-2025 year. This is the maximum amount that can be claimed as a deduction. You can make a personal one-off payment directly to your fund anytime between now and June 30. Sometime before you lodge your income tax return for this year, you nominate how much of that contribution will be concessional (in other words, claimed as a deduction) with the remaining amount going in as a non-concessional contribution. If your total superannuation balance as at June 30, 2024 was less than $500,000 you’ll be able to use “carry-forward” rules. This allows you to also claim unused amounts from up to five previous years. The ATO will show your June 30 balance in the superannuation drop-down menu. Significantly, the carry-forward rules have now reached their five-year maximum. This means that if you are eligible, you can utilise unused concessional contribution caps from up to five previous years, plus this financial year. Let’s say that on June 30 last year, your total super balance was $497,000. You’ve just sold an investment property and after applying the 50 per cent capital gains tax discount method, $200,000 is added to your taxable income. Assuming you had no other concessional contributions, the available maximum contributions under the carry-forward rules are: $25,000 (for the 2019-20 and 2020-21 years); $27,500 (for the 2021-22, 2022-23 and 2023-24 years); and $30,000 (for the current financial year). All up, you could make a one-off tax deductible contribution of up to $162,500. A couple of other points to remember. If your adjusted taxable income exceeds $250,000, you will be liable for an additional 15 per cent contributions tax. ATI includes gross income from employment, investments, voluntary concessional superannuation contributions, net capital gains and an add-back of investment losses. For example, if you are negative gearing and have an investment income loss of $2500, that $2500 would be added back under the ATI calculation. A concessional contribution to super cops a contributions tax of at least 15 per cent, no matter what your personal taxation liabilities may be. For most of us, that means claiming a deduction that brings your income below $22,575 is pointless, because thanks to various tax offsets, you pay no tax anyway. If you are aged over 67, that limit lifts to $35,813 for singles and $31,888 each for couples.