How Catch-up Concessional Super Contributions Work

Nathan Yap
1 day ago
2 min read

There may be cases where you aren’t able to put money into your superannuation fund. Whether you're taking time off work, studying, or even being dedicated financially to other responsibilities, sometimes it’s just not possible. Nonetheless, you might be qualified to make catch-up concessional payments if the time ever comes when you want to contribute more to your retirement funds for better financial planning.

What are Concessional Contributions?

Concessional contributions are paid to your super fund before taxes and include the following:

Compulsory Superannuation Guarantee Contributions

These are the before-tax contributions your employer is required to make into your super fund under the Superannuation Guarantee, provided that you’re eligible.

Voluntary Salary Sacrifice Contributions

This includes additional contributions you can get your employer to make into your superannuation fund out of your before-tax income if you choose to.

Voluntary Tax-Deductible Contributions

These entail contributions you can make (such as when you transfer funds from your bank account into your super) that you then claim a tax deduction for.

How Can Catch-up Concessional Contributions Be Beneficial?

For those who have previously been unable to contribute the maximum amount to their superannuation plans, catch-up concessional contributions may be advantageous. While the current yearly ceiling on concessional contributions is $25,000, catch-up concessional contributions may let people contribute an additional $25,000 in concessions per fiscal year, provided they haven't gone over the limit in the previous five fiscal years. As a result, people may accelerate the accumulation of their retirement savings.

Basic Rules for Catch-up Concessional Super Contributions

You must be 65 years of age or older on the contribution date.
Your entire super balance had to be less than $500,000.
The current fiscal year must be used to make the catch-up contribution.
You are permitted to make catch-up contributions of up to $25,000 every fiscal year and a lifetime limit of $500,000 in total.
Up to the concessional contributions ceiling, you may deduct personal donations from your taxes.
Excess contributions tax will apply to any donations that exceed the cap on concessional contributions.

At Prudent Finance, we’ve assisted our clients in understanding superannuation for years. We’ll help you maximise the constant changes to superannuation regulations so that you’ll be more equipped for the future. Contact us today for a consultation.

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