Concessional Contributions are the technical term for all contributions entering your superannuation account from pre-tax dollars or for which you will claim a tax deduction.

These include:

1. Employer Contributions
2. Salary Sacrifice Contributions
3. Personal Deducted Contributions
4. Self Employed Deducted Contributions

New legislation has allowed for catch up contributions where you have not maximized your use of your concessional contributions cap, this is an area of opportunity for both building your retirement and reducing tax liabilities.

To utilize this feature:

1. Have unused concessional contribution cap from the 1^st of July 2018 onwards. (The cap is currently $25,000, for example if you had $20,000 of pre tax contributions enter the account this financial year, you would have a remaining cap of $5,000 that you could contribute next year along with that years cap of $25,000, totaling a new personal cap of $30,000 for the coming financial year).
2. Have an account balance of less than $500,000.
3. Have unused concessional contributions cap over the last five years.

The benefits of this feature:

There are many strategies that revolve around this new superannuation feature, but most relate to adjusting your contributions to maximise your superannuation and retirement outcome by adjusting your tax assessable income in line with variations of your income and cash flow.

Some examples are:

1. You are self employed and have had a few bad years of income and as such didn’t have the spare funds needed to contribute to your superannuation, business suddenly picks up again and you find yourself having a stellar year and earning a whopping $200,000, it may be appropriate to contribute some of this boost in income to your superannuation, utilizing the contribution cap of several years at once eg. in 2021 you may have built up enough spare concessional cap to contribute up to $75,000 in one hit, saving you over $16,500 in net tax.
   
2. You have over the years as an employee only received contributions to your superannuation via Superannuation Guarantee, you are on a steady income of $60,000 plus superannuation, when after years of hard work you receive a pay rise and a promotion, you suddenly find yourself on an income of $80,000 plus superannuation, by sticking with your existing budget and not spending more, you can contribute this $20,000 to superannuation resulting in total pre tax contributions of $27,600 an excess contribution of $2,600, you can continue to do this until you have consumed your unused cap, resulting in a tax saving of an estimated $3,500 per year.
   
3. You sell a property after several years and after allocating your capital gains discounts have a large amount of assessable income, you can use this lump sum of money to boost your superannuation and reduce this year’s tax liability as well, saving up to a potential maximum of $56,250 in one year.

We welcome you contact us today to discuss your contribution options and what further opportunities may be available to you and for guidance in the ever changing legislative environment.