Making additional contributions over and beyond the superannuation guarantee payments of your employer to your retirement savings can make a huge difference to your post-retirement lifestyle. However, this tax-effective option has not previously been available to everyone; it is now.
For various reasons some employers do not offer salary sacrificing arrangements to their employees even though they still make the 9.5% superannuation guarantee payments. Also, some people do not wish to commit to regular salary sacrifice payments, preferring to pay tax on their income and save it outside of their superannuation.
New changes now enable everyone to make tax deductible voluntary contributions into super at the concessional tax rate, not necessarily through salary sacrifice. You can now take some of your savings on which you have already paid tax and make a voluntary contribution into your super. (The $25K cap still applies.) You can then claim a deduction in your next tax return for the additional contribution.
This enables more flexibility over the timing of payments. Depending on your financial situation, you may not wish to commit to regular salary sacrifice contributions, instead preferring to make catch-up payments as 30 June rolls around.
Be aware though that contributions that exceed the $25K cap are taxed at your marginal tax rate and attract an excess concessional contribution charge if they are not subsequently withdrawn from your fund. Therefore, if you are considering making an additional contribution you should monitor how much has already been paid into your super during the year as well as the timing of further employer contributions which will be made prior to 30 June.
Also, to claim a deduction in your tax return, you must send a notice of intent to do so to your super fund and receive an acknowledgment from them. These notices will have to be sent and received before you lodge your tax return.
This is a very good change that gives some people more options and control with their super. But there are details that need to be understood. We would be happy to discuss how to take advantage of salary sacrificed contributions or the possible new alternative.