Topping Up Concessional Contributions

During this financial year, my concessional contributions i.e. employer and salary sacrifice contributions are at 17k. Am I allowed to add to this amount with a personal contribution and claim this top up as a tax deduction keeping in mind that I must inform my super fund of my intention. There will be no more employer contributions as I have retired. Any thoughts?

 

Your age ?
You expected taxable income prior to that deduction ? eg A super deduction cannot create a tax loss and is fairly ineffective if taxable income is bought under $45K
Catch up concessional contributions available ?
Can you also benefit from the co-contribution by leaving some as a non-concessional contribution ?

Also between now and 30 June the employer may add further contributions so planning around that will limit unnecessary amounts. But some can be non-concessional (adjust and claim the maximum deduction later when drafting tax) The deduction notice need not be done until after 30 June.

 

Hi Paul.
Should have said that I am 62 and I cannot contribute any more to super via non concessional contributions as my balance is over 1.6m. Taxable income for year will be approx 100k.

 

The cap rises to $1.7m on 1 July.
If TI is $100k approx there may be tax savings to max your concessional to $25K (inc all employer, sal sac or personal deductible contributions). Catch up contributions wont be available as your balance exceeds $500K

Is there a spouse ? NCC to a spouse is a option.

 

Hi Paul,

I have $50K of unused concessional contributions. I have no super at the moment and will be setting it up next week.

In the 20/21 financial year, I can make a $25K concessional contribution and a $100K non-concessional contribution.

Does that mean that I can contribute $75K of concessional contributions and $100K of non-concessional contributions for 20/21? (my balance obviously doesn't exceed $500K).

Thanks.

 

I cannot answer this. It is financial advice and requires knowledge of your position and advice under a AFSL (Australian Financial Services License). There is also a trap to the question. Concessional super is also limited to the taxpayer taxable income. Super deductions cannot create a loss. A concessional contribution would be reclassified as non-concessional if you made that mistake.

I recommend you seek financial advice from the fund with copies of the ATO unused limits on hand

 

Thank you -I clarified the above question with my FP today.

 

Re: catch up provisions. Assuming balance is under $500,000

ATO says - From 2019-20 carry forward rules allow extra concessional contributions...

Then refers to caps from up to five previous years.

Does the “From 2019-20” just mean this is when this scheme was introduced?

Can I make extra contributions in 21/22 for unused contributions (if any) from

20/21
19/20
18/19
17/18
16/17

 

No. The earliest carry forward year is 2019. Hence in 2020 or later you can use what wasnt used in 2019 and so on. Unused 2017 and 2018 are not available

The ATO track actual amounts in online services. Accessed under the Super menu. If you dont have MyGov your tax agent can also assist

 

Thanks - that is a definitive answer - removes my confusion.

 

Ironically I was doing one with same issues as you posted.

 

Spooky!

Amazingly, I checked it out on Mygov - actually very clearly stated.

For the benefit of other readers (who are not Super savvy)

It clearly states the years being accessible are:

20/21
19/20
18/19

and the ATO is using clear terminology such as:

- Concessional contributions cap $25,000
- Contributions counting towards your cap $ xx
- Unused concessional contributions cap $ 25,000 less xx = yy.

and they have a total for the three years.

Impossible to make a mistake.

 

Thats means whatever ATO showing + 21/22 (27500- whatever your employer paid)?

 

Yes.

 

Yes they have improved it. The 2022 concessional contribution is not necessarily correct. This is a NOTIONAL account based on single touch payroll and other data and may be blank for a smsf. Typically if the member contribution for 2022 is excessive you merely elect to seek a deduction for the amount that brings total concessional up to $27500 for 2022. Then the remainder is non-concessional. No problem.

Remember you must advise the fund you intended to claim a deduction and can lodge that request between the time of contribution and the tax return HOWEVER if you plan to rollover or commence a pension or perform a spouse split you should do it BEFORE doing either of those two things. Otherwise some or all the deduction could be lost. That paperwork is critical. The fund will confirm the deduction in writing. The ATO ""I"" return now asks at field D12 if you have that letter.

 

When I 'll deposit/transfer the Personal Concessional Contribution and Non Concessional Contribution into the SMSF account - what do I need to mention in the description of the transfer to appear on the statement/transaction ?
: Do I need to mention my name then PCC or NCC or nothing and at the time of smsf tax return allocate the category ?

 

No. The matter of deduction notices and the accounting will determine this. There are distinct benefits of NOT putting narration on such deposits. TR 2010/1 says its a contribution...The accounting determines for whom and what the catgeory of contribution is. Deduction notices will play its part. A key strategy is to bring forward the smsf accounting so personal deduction benefits can also be bought forward.

A warning. Early deduction notices are a smart idea. If a member dies before doing the notices the contribution will be locked in as non-concessional.

 

Very helpful @Paul@PAS so I just transfer and accounting will determine at the tax return stage.

From a non expert point of view- Isn't it easy to assign the funds at the time of transfer as it will give more transparency to ATO?

I am sure thry have thought about it

 

Maybe, maybe irrelevant TR 2010/1 indicates why.
Some memebers should follow the process for deduction notices asap and others can wait. If the super balance will be rolled over, used to start a pension etc then early notices are recommended. A taxpayer cant claim a deduction until the formalilities are completed.

 

What happens if you contribute after tax income to super (to claim back at tax time) and you end up exceeding the $27500 annual cap? I.e. you overestimate?