Navigating SMSF contributions and investment decisions in the festive season

“If you have a salary sacrifice contribution arrangement with your employer and you had a salary change, you should check with your payroll that you are on track to meeting your contribution goals for the year,” she said.

“Alternatively, you may be able to put together a savings plan so you have cash to top up this contribution at the end of the financial year.”

Ms Akalo said several strategies can be used to top up super contributions leading up to the start of the new financial year.

The first of these is boosting salary sacrifice contribution arrangements via an employer, but she noted it is important to remember that the annual super concessional (pre-tax) cap of $27,500 includes employer-mandated contributions, so any salary sacrifice arrangement in place cannot breach the annual concessional cap.

Another strategy to boost contributions is by making a lump-sum personal deductible concessional contribution if you are under the age of 67.

“If you are over 67, there are certain restrictions that limit the use of this strategy, but it is worthwhile discussing with your financial adviser,” she said.

“For those on low annual incomes up to $58,445 and working, if you make a $1000 non-concessional contribution for the year, you may be entitled to the government co-contribution of up to $500 on non-concessional (or after-tax) contributions.”

She added that for those who can afford to put aside $167 per month over the next six months, it can fund the $1,000 contribution and give a 50 per cent return with no market risk.

“There are no tax implications for the end of the calendar year – it is all about ensuring you are on track to meeting your superannuation contribution goals by the end of the financial year on 30 June 2024,” she said.

“However, if your personal taxable income is below the tax-free threshold for the financial year at approximately $18,200, it may not be worthwhile making a tax-deductible or salary sacrifice concessional contribution as these contributions are taxed at 15 per cent upon payment into your fund.”

There are some challenges in making these contributions, including ensuring contributions made into a fund are affordable as access to them may be limited in the short term.

“Under current superannuation rules, the balance of your super can only be accessed under limited circumstances and upon meeting certain conditions,” Ms Akalo said.

“For example, those who cease an employment arrangement after the age of 60, retire from the workforce altogether after the age of 60, or attain age 65 meet a condition of release and can fully access their superannuation balance.”

Another thing to be aware of is that contributions don’t breach the annual superannuation contribution caps which are currently $27,500 for concessional contributions, and $110,000 or $330,000 where you “bring forward” a further two financial years of the annual non-concessional cap.

“Prior to making a non-concessional contribution it is important to check your TSB does not exceed the $1.9 million cap as any excess may be subject to additional penalty tax of up to 47 per cent including the Medicare Levy,” she said.

Aaron Dunn, CEO of Smarter SMSF said, that with stage 3 tax cuts coming into force in July next year some SMSF members may have a higher level of income and more capacity to contribute.

“They could perhaps consider salary sacrifice as an opportunity to increase their contributions if they don’t have a need for the tax cut,” he said.

“Holiday bonuses are another opportunity to optimise contributions, but members need to be prospective in planning these. If they miss the boat in these sorts of things they can still make member deductible contributions within the concessional cap.”

Mr Dunn said regarding investment strategies for the new year, there are two main considerations.

“Firstly, for those that are going to be impacted by the new Division 296 tax, they will have to think about what their investment strategy is going to look like going forward,” he said.

“This will include what kinds of assets may be retained inside or outside of super.”