Question 1

I am intending to use the bring forward provision to contribute to both my and my wife’s super, [because] they just indexed the amounts. Can you confirm that this is a smart strategy? How frequently does indexing happen?  My understanding is that once you utilise bring forward, you are stuck with the amount allowed at the time and do not benefit from any future indexing for the years that the bring forward contributions apply. Is that correct?

Yes, if you have the money, using the bring forward rules to contribute to super is often a great strategy to build wealth and set you up for retirement.

Superannuation has very generous tax rules. Therefore, there are limits on how much you can contribute and how much you can have in total.

In terms of indexation, contribution caps are indexed by the average weekly ordinary time earnings.

It’s actually the concessional (pre-tax) cap that is indexed in lots of $2500. The non-concessional cap (after-tax) cap is then always four times the concessional cap.

You might like

In Depth

8000 years of history revealed on Guuranda, Yorke Peninsula

In Depth

Contenders emerge for Liberal deputy leadership, Morialta preselection

The current concessional cap is $30,000 therefore the non-concessional cap is $120,000 (4 x $30,000).

As you have stated you can use the bring forward rule to put up to three years of non-concessional contributions into super in one go, for example, $360,000. This is shown in the table below.

You might like

In Depth

8000 years of history revealed on Guuranda, Yorke Peninsula

In Depth

Contenders emerge for Liberal deputy leadership, Morialta preselection

You are correct in that if you did use the bring forward rule and indexation occurred, say in year two, you are still locked into the old caps until the end of the three-year bring forward period.

Question 2

My husband and I are receiving JobSeeker payments. My husband is 66 ($360,000 super) and I am 63 ($270,000 super). We own our home and have $40,000 in the bank. We want to move some super from my husband’s account to my account using the amount under the carry forward concessional contributions ($38,000) shown in the ATO website. We believe this would be beneficial as I will be retiring three years after my husband.

My question is: Can I claim the $38,000 through tax using the “Notice of intent to claim” form? Or is this not possible as the money was from a super fund and already taxed? Alternatively, we could use the $38,000 from our bank account. My concern is as we are not working, can I even submit a tax return?  Any advice would be appreciated.  

There are a few things to unpack in your situation.

The “carry forward concessional contributions” relates to how much concessional contributions you can make and stay below the applicable contribution cap.

When talking about moving super between you and your husband, you have to make sure you are making the correct contribution.

There are three options:

•   If your husband worked last financial year, and/or had some type of concessional contributions made into his super (for example, employer SG or personal contributions he claimed a tax deduction on), then he can apply to have them ‘split’ into your super (less 15 per cent contributions tax paid). Again, this is only allowed for contributions made to his super last financial year.

As your husband is over 65 there are no restrictions on what he can cash out. Therefore, the simplest option is to withdraw money for you and then contribute the funds to your super.

•  You can look at making a tax deductible contribution to super. However, the maximum you can claim is the amount of your taxable income. For example, if you received $20,000 in JobSeeker payments and you had no other income, then you can’t claim more than $20,000. But in reality, you should not do this as these types of contributions attract a 15 per cent tax. And from the sound of things, you are not paying any income tax.
• You can make a non-concessional (after tax) contribution. Both from funds cashed out from your husband’s super and any money you have in your bank account. This sounds like it may be the best way to go.

When your husband reaches the age for the age pension at 67, his super will be counted under his assets test for the age pension as well as yours when assessing your JobSeeker payment.

Therefore, moving money from his super to your super does sound like an appropriate strategy to consider if trying to maximise both of your future income support payments. You just need to ensure you are making the type of correct contribution.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.