It is a fact that the rules around super are constantly changing. I understand that for a lot of
people including myself, this is frustrating and creates uncertainty. There have been a
number of changes that we have totally disagreed with and this includes the reduction in the
amount older Australians can contribute to their super tax effectively as well as the changes
to ‘Transition to Retirement’ pensions. Older Australians need to be given the chance to
build their retirement savings as they get closer to retirement.
There are however some new rules that are actually really good and we have decided to
provide some information on three of these in particular.
1. Downsizing & contributing to super policy
This has recently become law and it will allow a person or a couple to use some of the
proceeds from the sale of their home and contribute this to super. This takes affect from 1
July 2018. The eligibility criteria includes;
– A person must be over age 65
– It must be the from the sale proceeds of a home (not an investment property) and was
owned for at least 10 years
– The amount contributed to super is capped at $300,000 per person (i.e. $600,000 for a
The good thing about this rule is that it allows older Australians to downsize their home and
boost their super where in normal circumstances they are not able to add any more to super
due to occupation and age restrictions.
A person needs to be careful however that doing this does not adversely impact their
Centrelink entitlements (e.g. Age pension) and we encourage anyone thinking about this to
speak to an expert first.
2. Tax deductible super contributions
In very broad terms, prior to 1 July 2017, only those people who were self-employed
(meeting the 10% rule) and certain other individuals were able to make a contribution to
super and claim a tax deduction. The same ‘concessional’ contribution cap of $25,000
From 1 July 2017, this now applies to all people. This now provides a lot more flexibility. For
example, a person may choose not to make extra contributions from pre-tax income (i.e.
salary sacrifice) but instead wait until close to the end of the financial year and decide to top
up their super all at once by making a contribution (from savings) and then claiming a tax
Another example may be where a person sells an asset during the financial year and incurs
CGT. They could then potentially use some of the sale proceeds and contribute this to super
(within the cap) and claim a tax deduction which will help improve their overall tax position.
3. Ability to make ‘catch up’ concessional contributions
Many people have either been self-employed, been out of the workforce for long periods or
have been earning a low income. They naturally will have a lower super balance and may
wish to catch up.
From 1 July 2018, a person with a total super balance of $500,000 or below will be able to
utilise the unused portions of their concessional caps ($25,000 pa) from previous years (up
to 5 years worth) in the following financial year, or future years.
For example, in the year 2023, Peter (age 50) has a super balance of $100,000 and now
wishes to build this up. He is self-employed and has not made any super contributions for
the last 5 years. He has sold some investments and now has $125,000 sitting in cash. He
can essentially use the ‘unused’ portion of his annual concessional cap ($25,000 pa) for the
last 5 years and contribute this all at once – i.e. $25,000 x 5 = $125,000.
This rule is available to all people who are eligible to make super contributions and there are
many different circumstances where this could apply.
The majority of the rule changes to super were made to make the system fairer for most
people. Some of the new rules can be very powerful if you meet the eligibility criteria and you
are in a position to take advantage of these. These and many of the other rules not detailed
in this article can have some complexity and we would encourage you to seek advice first.
Choon Kwa and Sam Pizzata are directors of Eight Financial Pty Ltd ABN 25 114 328 942 and Plexus Wealth Pty
Ltd ABN 58 108 336 705 trading as Resolution Wealth Partners and are authorised representatives and credit
representatives of Charter Financial Planning Limited ABN 35 002 976 294, AFSL and Australian Credit Licensee
(Charter). Australian Investment Solutions Pty Ltd ABN 14 124 764 576 and Catalworx Pty Ltd ABN 58 126 066
859 also trade under Resolution Wealth Partners.
This editorial 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. Charter Financial Planning and its Authorised Representatives
do not accept any liability for any errors or omissions of information supplied in this editorial.