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Superannuation contributions are crucial for building a retirement nest egg and an excellent way to have a tax advantaged wealth portfolio. Understanding the different types is key to optimizing your savings strategy. Contributing to superannuation can provide a variety of benefits depending on how you contribute including, tax savings, increased retirement balances and potentially other government benefits. We will be exploring the main types of contributions:
Concessional Contributions:
Concessional Contributions, also known as before-tax contributions, include employer contributions and salary sacrifice arrangements. These contributions are generally taxed at a 15% tax rate within the super fund whilst not being taxed in your personal name. This can make concessional contributions a potentially tax efficient way to boost your retirement savings while reducing your taxable income.
The current concessional contribution cap for FY23-24 is $27,500.00. From 1 July 2024, the concessional contributions cap is increasing to $30,000.00.
Non-Concessional Contributions:
Non-concessional contributions consist of after-tax payments made into your super fund. These can be personal contributions or contributions from a spouse. While non-concessional contributions do not offer personal tax benefits, they allow you to invest additional funds in a tax-effective environment, potentially leading to tax advantaged savings over time.
The current non-concessional contribution cap for FY23-24 is $110,000.00. From 1 July 2024, the concessional contributions cap is increasing to $120,000.00.
Special Contributions:
There are a variety of contributions an individual can make depending on their circumstances which the government provides different benefits for. Whilst we will not explore in depth these contributions, you can view the requirements and benefits of these further on the ATO website.
- Super co-contributions
- Spouse contribution
- Downsizer contribution
- Personal injury contributions
- Small business CGT concessions contributions
Importance of being Super conscious:
Understanding the nuances of these superannuation contribution types can greatly affect the impact it has on your financial situation and future retirement. Depending on what your goals are, and your specific circumstances, the type of contributions you make to super may make a significant impact on your future.
If you want to discuss any superannuation contribution strategies, contact MLS Financial today through our online contact form.
Disclosures:
- This information has been compiled from sources considered to be reliable, but is not guaranteed.
- Past performance is not a reliable indicator of future performance.
- The information contained on this website is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. MLS Financial and Infocus Securities Australia Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances.
