Superannuation contribution rules change from year to year, so it’s essential that taxpayers know what they are entitled to.

The main change to take effect from July 1, 2022, is an increase in the age required for the work test, rising from 67 to 75 for non-concessional contributions and salary sacrifice contributions.

For personal concessional contributions, those that you wish to claim as a tax deduction, the maximum age before you have to meet the ‘work test’ remains at 67.

What taxable contributions can be made for the year ending June 30, 2023?

The concessional contribution (CC) cap is $27,500 per person for the 2022-23 financial year, with any excess over the cap taxed at the individual’s marginal tax rate.

CCs are contributions that somebody is claiming a tax deduction for, including:

• Superannuation guarantee contributions (SGCs)
• Employer voluntary / extra contributions like salary sacrificing
• Member taxable contributions claimed as a deduction in personal ITR.

If you receive employer contributions in 2022-23, consider making personal taxable contributions to get you up to the $27,500 cap limit.

The higher your income, the greater the tax savings. Keep in mind that there is no upper age limit for being eligible to receive SGCs.

Carry forward provisions

An individual can carry forward CCs if their total superannuation balance (TSB) is less than $500,000.

The unused contributions can be carried forward for up to five years, with 2019-20 marking the first year that this provision can be used.

If your superannuation balance is less than $500,000, consider if you have carry forward CCs that can be made prior to June 30, 2023.

Work test

If an individual is under 75, there is no work test required to be able to make non-concessional and salary sacrifice contributions.

If an individual is between the ages of 67 and 74, they must meet the work test in order to make personal concessional (deductible) contributions. From July 1, 2022, individuals can make non-concessional contributions up until age 75 regardless of whether they work or not.

The work test is working 40 hours of gainful employment over a 30-day period at least once during the year.

Splitting of contributions

An individual can split their CCs that are made on their behalf to a spouse if they meet certain requirements.

The main reasons to split contributions are to:

• Assist with the limit of only being allowed to have $1.7 million to start an account-based pension with
• Assist with ability to make non-concessional contributions (NCC) given the cap limit also of $1.7 million
• Assist with the ability to use the carry forward provisions given the member balance cap of $500,000
• Address age differences between spouses and the ability to access benefits at an earlier date
• Access Centrelink advantages by minimising a member’s account
• Allow a member to have sufficient superannuation to be able to pay life insurance.

Spouse rebate for super contributions

A spouse rebate for superannuation contributions can be claimed up to a maximum of $540.

For the year ending June 30, 2023, if your spouse earns less than $37,000 per year and you contribute $3,000 into superannuation for them, you can claim a tax rebate of $540.

Spouse contributions can be made if you are aged under 75 from July 1, 2020.

What tax-free contributions can be made for 2022-23?

NCCs are contributions that an individual is not claiming a tax deduction for, with an NCC cap of $110,000 for the 2022-23 year.

Members under 75 have the option to contribute up to $330,000 over a three-year period, depending on their TSB. The rule works as follows:

TSB                                          NCC and bring forward amount

< $1.48m                                 $330,000 over 3 years

> $1.48 and < $1.59m          $220,000 over 2 years

> $1.59 and < $1.7m             $110,000 over 1 year

> $1.7m                                   $0 (nil)

There is also a ceasing work contribution rule that changes from age 67 to 75 as of July 1, 2022.

NCCs can be made on a once-off basis in the financial year after you have ceased employment if your TSB is less than $300,000 as of June 30 in the previous financial year. You also need to be under 75.

Downsizing contributions for over 60s

From July 1, 2012, anyone 60 years or older can make a downsizer contribution of up to $300,000 from the proceeds of selling their residential home.

The contribution is not an NCC and does not count towards the contribution caps, so it goes into superannuation as a tax-free contribution.

If a member has more than $1.7 million in superannuation, they are still allowed to make a downsizer contribution.

If the downsizer contribution is made and is placed into retirement phase, it will count towards a member’s transfer balance cap, which is $1.7 million.

Learn more about the downsizer contribution and eligibility requirements here.

Get more from your super

At LDB, our experienced financial advisors can help you navigate the complex world of superannuation contributions and carefully review your plans before making a contribution.

If you would like to discuss your super contributions, give us a call on (03) 9875 2900 or fill in the form below.

Editor’s note: This article was originally published on August 20, 2020 but has since been updated to include new information.