Can I contribute more money to my SMSF than my $25,000 annual contribution?
Yes, you can. There's two ways you can contribute to Super. The first one is as a tax deductible contribution or what we call concessional contributions. Concessional contributions, you are capped at $25,000 per person per year. But, from the 2019 financial year onwards, if you don't use all of your $25,000 contribution, let's say you only use $10,000 out of the $25,000, you can carry forward your unused amount for up to five years.
With concessional contributions, your super fund pays tax on those contributions at a rate of 15% when they go in. There is a higher tax rate for higher income earners called “division 293 tax,” which is basically doubling the tax that your super fund pays on those contributions. It’s a pain in the neck, but that's unfortunately another rule that they brought in a few years ago.
Now, there is something called non-concessional contributions. The limit at the moment is $100,000 per person, per income year. You do not get a tax deduction on the money when it goes into the fund. On the flip side, your fund does not pay tax when it receives that $100,000.
With non-concessional or non tax deductible contributions of $100,000, there's a special rule. If you meet certain conditions where you can bring forward that $100,000 contribution, so if we're in the current financial year, which is the 2021 financial year, we can look at 2022 and 2023's limits and bring those forward and put $300,000 in this financial year if we meet those conditions.
There are age limits and balance limits on the above - so please get advice before making any decisions.