Ask the Expert: Know your superannuation caps, contributions and tax concession

Many people plan to hold onto some savings through retirement.

Many people plan to hold onto some savings through retirement. Photo: TND

Question 1

  • How much money can you have in your super fund? My husband and I are self-funded. When the government says the most you will be able to have in your super fund is a certain amount, is that for a single person? What is it if you are a couple in a self-managed fund?

Thanks for the question. Firstly, you can have as much as you want in super, there is no cap.

There are only caps on how much you can contribute to super each year and how much super you can put into a pension.

These are not well understood, so to re-‘cap’:

  1. If you have a total super balance over $1.9 million, then you cannot make further after-tax (non-concessional) contributions to super. However, your super fund can still accept employer contributions, salary sacrifice contributions and hopefully it will still achieve some positive returns
  2. You can only commence a retirement pension with $1.9 million. This is the current transfer balance cap. If you have over that amount you can keep the balance in the accumulation stage of super. Again, if you start a pension with $1.9 million and it grows due to earnings, that is fine, no need to take it out
  3. The federal government has also proposed to apply additional tax (or reduce the tax concessions – depending on how you frame it) on super balances over $3 million starting from July 1, 2025. However, this is yet to be legislated
  4. The above are all at an individual level, so if you are a member of a couple, you can both max out the above so long as you have the money to do it, which is the hard part.

Question 2 

  • Hi Craig, I’m 63, work full time, am a renter living solo and have $180,000 in super. How can I make my super grow before I retire at 68 please?

Hello, the levers you can pull to increase your super balance are:

  • Contribute regularly. This could be via salary sacrifice and/or after-tax contributions. Depending on your income you may then be eligible for the co-contribution
  • Review your investments and choose an option with a higher risk/return profile if you are comfortable in doing so
  • You have stated you want to retire at 68. The longer you keep your super untouched, the longer it has time to compound and grow. Even working a little bit longer can make a big difference.

Assuming you don’t have many other assets you could be on track to receive the full age pension once you retire.

Therefore, when you convert your super to an income stream this will be in addition to any age pension payment.

 Question 3

  • Greetings, I earn my sole income from my savings (i.e. bank saving accounts). Thus, my income fluctuates relative to the interest rate. It fell below the tax-free threshold of $18,200 a few months ago and now is just a couple of thousand above that. I am not in the workforce currently and not in receipt of any income support from government sources (Centrelink), and will turn 59 in a month. Do I need to submit the ATO income tax return if my income is just above the taxable threshold? Am I eligible for any government support assistance and how to apply for it? Thank you.

Greetings to you. Yes, given your age and income you should complete an income tax return.

Depending on your overall level of income for the full financial year, that will determine whether you actually pay any income tax.

When taking into account the low income tax offset, a single person only ends up paying income tax if they receive over $21,884 (for 2023-24).

In terms of government support, there is JobSeeker, but if you have investments such as bank accounts over $301,750 then you would be ineligible.

However, based on your stated level of income you should be eligible for the Low Income Health Care Card. This provides access to cheaper medicine and utility bills. There is no asset test.

Details on how to apply are here.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

The New Daily is owned by Industry Super Holdings

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