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Non-concessional contributions are the key to boosting your retirement nest egg

While the majority of the contributions into your super account may come from regular employer Super Guarantee (SG) contributions, there are other ways to top up your super to help build your retirement nest egg. Non-concessional contributions can be a smart way to take control of your financial future and put you on the path to living your dream retirement.

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If you’re interested in taking advantage of non-concessional contributions but aren’t sure what they are exactly and where to start, we’ve outlined the basics below.

Key takeaways:

  • Non-concessional contributions are voluntary contributions you make after tax from your bank account or other savings.
  • There are various types of non-concessional contributions, including personal and spouse contributions.
  • For the 2021-22 financial year, the non-concessional contributions cap is $110,000.

What are non-concessional super contributions?

Non-concessional contributions are voluntary after tax super contributions you make from your bank account or other savings. They differ from concessional contributions like salary sacrificing because tax has already been deducted from the money you use to make the contribution.

Topping up your super with a voluntary, non-concessional contribution can be a clever way to boost your balance for the future.

What type of contributions are non-concessional?

There are several types of contributions that are considered non-concessional (after tax), including:

  • Personal member voluntary contributions
  • Spouse contributions

To help you get a better understanding about what these types of contributions mean and how they work, we’ve outlined them in further detail below.

Personal contributions

Personal voluntary contributions are any non-concessional (after tax) contributions you choose to make into your super from your bank account or other non-superannuation savings.

Spouse contributions

If your partner has taken time off work, whether to raise children, study, or for any other reason, their super could be falling behind. You can help by making a spouse contribution to their super account, or vice-versa – they can make a contribution to your account if you have taken a period of time off work and are no longer receiving regular employer contributions.

The tax offset for making spouse contributions is capped if your spouse earns less than the lower threshold amount. Visit our page on spouse contributions for full details on the tax offset available based on the income of the recipient spouse.

Is there a cap for non-concessional contributions?

The government has mandated contributions caps for how much you can contribute to super in both concessional and non-concessional contributions. The non-concessional contributions cap is $110,000 per year. If you contribute more than this amount, you may have to pay extra tax. You can find out about contribution caps on our website. For information about what happens if you exceed the cap, visit the ATO’s website

Am I eligible to make non-concessional contributions?

To make a non-concessional contribution, there are several eligibility criteria you must meet, including:

  • You must have a Total Superannuation Balance (TSB) of less than the Transfer Balance Cap on 30 June of the previous financial year. The Transfer Balance Cap for the 2021-22 financial year is $1.7 million.
  • You must be under the age of 75.

Why are non-concessional contributions so valuable?

There are plenty of benefits to topping up your super balance via non-concessional contributions, such as:

  • Boost your super balance
    • Making additional contributions to your super can help to further increase your super balance and can make a real difference for you in retirement.
  • Lower tax on investment earnings
    • The tax rate on investment earnings in your super account is a maximum of 15%, which may be lower than the tax rate on any investment earnings outside the super system.
  • Tax-free withdrawal
    • When you withdraw your super balance in retirement, any non-concessional contributions are generally returned to you tax free.
  • Higher contributions cap
    • Compared to the concessional-contributions cap of $27,500, the non-concessional contributions cap of $110,000 means you can add a lot more to your retirement savings through super.
  • Potential government co-contribution payment
    • In an added win, if you make a personal non-concessional contribution, you could be eligible for a co-contribution of up to $500 from the government.

How do I make a non-concessional contribution?

To make a voluntary, non-concessional contribution you can generally ask your employer to make a deduction to your super from your after-tax pay, or you can arrange the contribution yourself by direct debit or BPAY.

Visit our page on voluntary after tax contributions for more information on non-concessional contributions, as well as details on how to make them. Or, to speak to one of our qualified financial advisers, you can give us a call on 13 11 84.

Before joining Australian Retirement Trust, consider the potential loss of insurance and other benefits that you may have in your other funds. The information contained on this website is general information only and does not take into account your individual objectives, financial circumstances or needs. You should consider your own objectives, financial circumstances and needs, before making a decision about the financial product. Also, think about where your future employer contributions will be paid. You should consider the Product Disclosure Statement before deciding whether to acquire, or continue to hold the product. For more information or financial advice from Australian Retirement Trust, call us on 13 11 84.

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