New Year’s Super Resolutions: three contribution strategies to consider

The beginning of a new year is often a good time for us to take a break, relax and maybe make some resolutions for 2022. When it comes to superannuation, deciding on new year resolutions may be a little more difficult than usual as we’ll need to look into the political crystal ball. There’s a federal election in the melting pot, some of this year’s super legislation is sitting in parliament and we still need to keep planning for retirement.

For 2022 let’s have a look at a contribution’s new year resolution as they are the lifeblood which helps build a person’s retirement savings.

There are many ways in which contributions can be made to superannuation. They can include employer contributions made for Superannuation Guarantee purposes, an industrial award or a salary sacrifice arrangement. Individuals can make super contributions for themselves, their spouse or even children. The contributions may be tax deductible or non-deductible and may depend on a number of factors such as a person’s work status, age and the amount they have in superannuation.

Personal super contributions

Personal superannuation contributions can be made up to 67 years old without the need to meet a work test. Under the current rules a person aged between 67 and 75 is required to meet a work test of 40 hours in 30 consecutive days in a financial year. Meeting the work test can allow an individual to make concessional or non-concessional contributions to super. It’s important to make sure the contribution caps are not exceeded and that if an individual is making non-concessional contributions the person’s total super balance on 30 June in the previous financial year will determine how much can be contributed without a penalty applying.

Concessional contributions

The standard concessional (tax deductible) contribution that can be made to super for the 2021/22 financial year is $27,500 and takes into account total employer contributions and any personal contributions the individual has claimed as a tax deduction. However, if a person has a total super balance on 30 June in the previous financial year of no more than $500,000, they are able to carry forward the unused amount of concessional contributions since 1 July 2018. The carry forward rule applies on a rolling year by year basis for up to five financial years.

Contributions made by an employer for an employee are concessional contributions and are counted against a person’s concessional contributions cap. These contributions include any contributions made for Superannuation Guarantee purposes, contributions made under an industrial award and any salary sacrifice contributions.

Non-concessional contributions

The standard non-concessional contribution (non-tax deductible) is capped at $110,000 and can be made by anyone who has a total superannuation balance of less than $1.7 million on 30 June in the previous financial year. If the person is age 67 and under 75 non-concessional contributions can only be made if the person meets the work test of 40 hours in 30 consecutive days in a financial year. Legislation that is currently in the parliament proposes to abolish the work test for non-concessional contributions from 1 July 2022.

For anyone who is under age 67 at the beginning of the financial year, they may be able to have access to the bring forward rule which allows a person to make up to $330,000 over a fixed period commencing in the first year in which they make non-concessional contributions in excess of the standard non-concessional contribution of $110,000. If a person has a total superannuation balance on 30 June in the previous financial year of no more than $1.48 million, they can make non-concessional contributions of up to $330,000 at any time during a fixed three year period. If they have between $1.48 million and $1.59 million, they can make non-concessional contributions over a fixed two year period. If they have between $1.59 million and $1.7 million then they have access to the standard non-concessional contribution of $110,000 each financial year.

Downsizer Contribution

Downsizer contributions of up to $300,000 are available to anyone at least 65 years old and has sold their main residence that has been owned by a member of a couple for at least 10 years. The contribution is available on a once-only basis and must be made within 90 days of the sale of the residence. The good news is that there is no upper age limit to make the downsizer contribution.

Spouse Contributions

Spouse contributions can be made for a person’s spouse and are counted against the spouse’s non-concessional contributions cap. They can be used as a strategy to even up the couple’s super balances.

To be eligible, spouse contributions can be made for a spouse under 67 years old without the need to meet work test. But if the spouse is between 67 and 75 years old the work test must be met prior to making the contributions. Spouse contributions are unable to be made after the spouse has reached 75 years of age.

If the spouse is a low income earner with an adjusted taxable income of less than $40,000 it is possible for the contributing spouse to receive a tax offset of up to $540 for the first $3,000 of the spouse contribution. The tax offset is not available to the contributing spouse once their spouse has a total superannuation balance of more than $1.7 million.

Ceasing work contributions

Ceasing work contributions are permitted on a once-only basis after the member has reached 67 years old in the financial year after they have ceased work. These rules allow a person to make concessional (tax deductible) and non-concessional (non-deductible) contributions providing they have a total super balance of less than $300,000 on 30 June in the previous financial year.


Another benefit of making non-concessional contributions to super is that low income earners may qualify for the co-contribution which is paid to their super fund by the government. If either has an adjusted taxable income of less than $56,112 for the 2021/22 financial year and make a non-concessional contribution of up to $1,000 the government’s co-contribution can be up to a maximum of $500.

Low Income Superannuation Tax Offset

The low income superannuation tax offset is available for anyone with an adjusted taxable income of less than $37,000. It applies to all concessional contributions because the tax payable on the contribution received by the fund is usually greater than the personal tax a low income earner would pay if the contribution was paid to them as salary and wages.

The offset is calculated by the ATO and paid directly to the person’s superannuation fund.

Contribution strategies

1. Contribution Splitting

Contribution splitting can allow a person to split concessional contributions to their spouse. To qualify, the split to the person’s spouse can take place if they are under preservation age (currently 58 years of age) or between preservation age and 65 years old if they have not retired.

Concessional contributions include the employer’s super guarantee contributions, salary sacrifice contributions and personal deductible contributions. It is possible to split up to 85 per cent of the person’s concessional contributions or up to their concessional contributions cap which has been explained previously. The general rule is that the splitting of the concessional contribution to the person’s spouse takes place in the financial year after it was made to the fund.

Concessional contributions made in the 2020/21 financial year will usually be split in the 2021/22 financial year. This member is required to make an election that informs the trustees of the amount to be split. However, for anyone:

  • who is rolling over or transferring the whole of their super to another fund, or

  • withdrawing all of their super as a lump sum, or

  • a combination of the above two actions

The election and split must be made prior to any of these events taking place which may occur in the year in which the concessional contributions were made to the fund.

2. Recontributing to super

The recontribution strategy can be used once a fund member meets a condition of release of retirement or when they reach age 65, whichever occurs first. It involves a withdrawal of a lump sum and recontributing the amount withdrawn back to the fund as a non-concessional contribution. The strategy has been used for many years and can have some estate planning benefits if a taxable pension is paid to a member or death benefits will be paid ultimately to adult children.

It is possible to recontribute amounts withdrawn from super back to the fund as non-concessional contributions providing the person has a total super balance of less than $1.7 million. The effect of the recontribution strategy is able to reduce the amount of tax an adult child is required to pay on the death of a parent if they receive a super payment. To see whether there is any benefit in using the recontribution strategy advice is always recommended.

3. Make extra contributions

As a New Year resolution, why not consider making additional contributions to a superannuation fund and benefit from the potential benefits from compounding returns. A relatively small increase in contributions, especially when a person is young, can make a real difference to the amount accumulated by the time retirement arrives.

If your superannuation needs a boost but you’re not sure where to start, call us on Ph: 07 3340 5117

Reproduced with the permission of the AMP Capital. This article was originally published at
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