Now might be a good time to top up your super and help give your balance a welcome boost. Here’s a guide to help you make the most out of your super before 30 June.

Super is real money, and it’s your money. By the time you retire it will likely be one of your biggest assets, so putting some thought into making contributions today may help you achieve the lifestyle you want in retirement.

Benefits

Making additional contributions could help give your super balance a boost. Take Alex for example. She’s 40 years old and decides to contribute an extra $100 each month to her super, as a before-tax contribution. If she keeps it up, by the time Alex retires at age 67, it could mean an extra $38,496 in her super^{^}.

And there are potential tax benefits as well:

• Reduce your taxable income – if you make before-tax contributions from your salary or claim a tax deduction in your tax return for your personal super contributions, you'll lower your taxable income, which could mean less tax.
• Pay less tax on investment earnings – earnings on your super are taxed at a maximum of 15%, whereas earnings on personal investments outside of super are taxed at your personal (marginal) income tax rate. This can be as high as 45%.

^{^} Example is for illustrative purposes only and has not taken your individual circumstances into account. It assumes a 5.0% pa investment return until retirement at age 67. The example includes a super account administration fee of 0.8% pa, employer contribution rate of 9.5% pa (which increases over time in line with the law), a wage inflation rate of 3.5% pa and a discount for price inflation of 2.5% pa.

Contribution Caps

Before-tax contributions cap- $25,000:
There is a cap per financial year ($25,000 for 2017-2018) on the amount of before-tax contributions you can make. This includes salary sacrifice and compulsory employer contributions, as well as personal contributions which you claim as a tax deduction in your tax return.

After-tax contributions cap- $100,000:
There’s a cap per financial year ($100,000 for 2017-2018) on the amount of after-tax contributions you can make. If you’re under age 65, you can also ‘bring forward’ up to 3 years’ worth of after-tax contributions, which means you could contribute up to $300,000 in a financial year. However, if your total superannuation balance at 30 June of the previous year was $1.6 million or more, your after-tax contribution limit will be reduced to zero.

Other considerations at this time:

• Increased eligibility to claim a tax deduction on personal contributions
  
• The First Home Super Saver Scheme
  
• The tax offset on spouse contributions has been made available to more people

Things to note:

• Any contributions into super are generally only accessible when you reach preservation age and retire. There are exceptions, such as under the First Home Super Saver Scheme.   
• If you exceed the contribution cap limits, additional tax and penalties may apply.
• Before-tax super contributions will typically be taxed at 15% upon entry to your super fund.
• The value of your investment in super can go up and down. Before making extra contributions, make sure you understand and are comfortable with any risks tied to your investment option. Find more information about super investment options.
• There are different ways to add to super.
• You should consider your own circumstances and decide what’s right for you.

General Advice Disclosure: This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.