Legislation changes apply from 1st July 2019 that provide some people with an opportunity to contribute more to superannuation than previously possible.
Work Test Exemption
Allows certain people aged 65-74, to make a once-off contribution in the year following the year in which they last met the “work test”. One qualifier is that the person’s “total superannuation balance” (taking into account all accumulation and pension accounts) must be less than $300K at 30th June of the prior year.
This could allow people to make “non concessional” contributions up to $300K, “concessional” contributions up to $25K and to also utilise the small business capital gains tax exemptions up to $1.515M. These strategies seek to save personal tax and/or maximise capital for retirement use, in the low-tax superannuation environment.
Catch-Up Concessional Contributions
This provision allows some people, who have not fully utilised the $25K annual cap in particular years since 1st July 2018, to make additional “concessional contributions”. “Unused” amounts will accrue over 5 year rolling periods before the opportunity expires. To make use of the “catch-up” concession from 2019/20, the individual’s “total superannuation balance” must not have exceeded $500K on the 30th June of the previous year (starting June 2019).
This strategy could be useful where a person has sold a property or shares and wishes to minimise capital gains tax, or where their income is higher than previous years (or they were not employed) and they wish to utilise the “catch-up” to boost their super savings in a tax effective way.
Note: Other complex rules also require consideration, consequently to avoid penalties, you should seek advice before making any additional superannuation contributions.