The end of financial year (EOFY) period doesn’t own exclusive rights over extra superannuation contributions. Contributions can be made at any time of the year as long as they don’t exceed your relevant contributions cap. So why is the EOFY period important for SMSF members?

First of all, it tends to be the main time of the year that we think about making tax effective investments and purchases. Secondly, it’s often not until we’re nearing EOFY that we actually know how much we can afford to contribute in terms of spare funds. And finally, timing is important when it comes to the ‘bring-forward rule’.

But first let’s discuss employer or personal deductible contributions. These types of contributions are classed as ‘concessional’ contributions. For those under the age of 50 the limit per year for concessional contributions has stayed static at $25,000 for the last few years. But, since their introduction, the concessional cap for those aged 50 years and over has been double that of the under-50s. This financial year, for the first time, the cap for those aged 50 years and over has been brought down to the same level as everybody else - $25,000.

So the risk for those 50 years and over of accidentally exceeding their concessional contributions cap has increased this year. Additional contributions that take you over the $25,000 level will be heavily taxed, including a penalty tax of 31.5 per cent in addition to the usual 15 per cent tax payable on the contribution. So be sure to seek advice from an expert this year before contributing too much into your SMSF.

What is the ‘bring-forward rule’?

Aside from concessional contributions, you can also contribute personal after-tax contributions – classed as non-concessional contributions. If you are eligible to contribute to super then you are allowed to make non-concessional contributions of up to $150,000 a year. If you are under the age of 65 years, you can also potentially utilise the “bring forward rule” which enables you to “bring forward” the next two years of non-concessional contributions by making up to $450,000 of contributions over three years. You just have to be less than 65 years of age at the beginning of the financial year in which you trigger the “bring forward” rule.

If you are under 65 and have more than $450,000 ready to contribute now (and assuming you haven’t already triggered the “bring forward” rule in the past period) then timing is everything. Consider contributing up to $150,000 before 30 June – making sure you don’t trigger the “bring forward” rule. And then wait until July when you can then utilise the “bring forward” and contribute up to $450,00.

Don’t forget that while your personal contributions are generally cash, you can also make an “in specie” transfer of assets such as ASX-listed shares or a commercial property, as long as the value does not exceed $450,000 at the time of contribution. Please seek advice on what can and cannot be transferred as the rules are strict in relation to “in-house assets”– for instance, residential property you own cannot be transferred.

Don’t forget that if you exceed your non-concessional contributions cap, you’ll have to pay 46.5 per cent tax on the excess amount AND any amount you exceed your concessional contributions cap by will be added to your non-concessional contributions.

While such major contributions may not be realistic for every superannuation account holder, statistics show us that SMSF members hold an average superannuation balance that is 17 times higher than those outside the SMSF environment. This indicates that SMSF members are more likely to have extra funds and non-superannuation investments to utilise to top up their super balance, and this is the time of year to think about it.

But get in early. If you want to maximise your contributions to super this financial year, whether concessional or not, make sure you make an appointment with your adviser and ensure your contributions are banked to your SMSF before 30 June.