Contributing a lump sum into super

Contributing a lump sum into super


Australians can make two types of contributions each year; concessional contributions, which are taxed at 15 per cent, and non-concessional contributions, which are not taxed.

There is a limit of $35,000 for concessional contributions and $180,000 for non-concessional contributions. However, individuals do have the option of using the three-year bring forward rule that allows taxpayers to contribute a lump sum of $540,000 as a non-concessional contribution if they are under the age of 65.

Using the three-year bring forward rule means individuals cannot make extra non-concessional contributions over the next two years.

Individuals that have accumulated a large sum of money from savings, an inheritance or sale of an asset, and want to contribute the amount to their super, may be best suited to making a non-concessional contribution.

Making a non-concessional contribution means you will not have to pay tax and will be able to transfer the whole amount as a lump sum contribution into an SMSF.

However, for those who are expecting more funds in the future, it may be better to put $180,000 into the fund on year, and another $180,000 in the following year.

For those who have sold an asset, you may have a capital gain and have to pay capital gains tax. Maximising your concessional contributions ($35,000 a year) can lower your taxable income for the current financial year and also reduce your capital gains tax liability.

Those with an SMSF who are self-employed can contribute a lump sum of $70,000 to their fund at the end of the financial year. They can also allocate $35,000 this financial year and $35,000 next financial year to reduce their capital gains liability.

Categories

If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


+ There are no comments

Add yours