SMSF Contribution Strategies Guide

Several contribution types sit outside the standard caps and are covered in dedicated sections below:

• Carry-forward concessional contributions: Using unused concessional cap from prior years. Covered in Section 04.
• Bring-forward arrangement: Contributing up to 3 years of the NCC cap in a single year. Covered in Section 05.
• Spouse contributions and contribution splitting: Separate mechanisms for directing contributions toward a spouse's account. Covered in Section 06.
• Government co-contribution: A matching government payment for eligible low-to-middle income earners. Covered in Section 07.
• Downsizer contributions: From the proceeds of selling a main residence, available to members aged 55 and over. Covered in Section 08.
• Structured settlement contributions: From personal injury compensation. Outside all caps - not covered in detail on this page.

Employer contributions - including the mandatory superannuation guarantee (SG) rate of 12% in FY2025-26 - are concessional contributions. They count toward the member's $30,000 annual concessional cap.

Trustees who are also employees should be aware that SG contributions made by their employer reduce the remaining cap space available for other concessional contributions. Monitoring the combined total during the year is important to avoid an accidental excess.

A salary sacrifice arrangement allows an employee to direct a portion of their pre-tax salary into super. The contribution is made by the employer on the employee's behalf and is classified as a concessional contribution.

• Must be agreed with the employer before the income is earned - cannot be applied retrospectively
• Reduces assessable income, which may affect income tax, Medicare levy, and means-tested government benefits
• Counts toward the $30,000 concessional cap alongside SG contributions
• Not all employers are required to offer salary sacrifice arrangements

For self-employed trustees or those without access to salary sacrifice, personal deductible contributions may achieve a similar outcome.

Members who are not covered by salary sacrifice - including the self-employed and those not in employment - can make personal contributions and then claim a tax deduction, treating an after-tax contribution as concessional.

To claim the deduction:

1. A valid Notice of Intent to Claim a Deduction must be lodged with the fund before lodging the personal tax return for that year
2. The fund must acknowledge the notice
3. The contribution must have been made before 30 June to count in that financial year

The deduction reduces taxable income in the same way salary sacrifice does, but is claimed through the tax return rather than at source.

Higher-income earners with combined income and concessional contributions above $250,000 pay an additional 15% tax on concessional contributions via Division 293 tax. This brings the effective rate on those contributions to 30% rather than 15%.

Division 293 tax is assessed by the ATO after the annual tax return is lodged. It can be paid personally or from the super fund. The payment method has no effect on the contribution itself but affects cash flow inside the fund.

Members aged 67 to 74 must meet the work test to make personal contributions (both concessional and non-concessional). The work test requires at least 40 hours of paid work in any 30-day period during the financial year in which the contribution is made.

A work test exemption is available in the first year a member fails the work test, provided their TSB was under $300,000 at the prior 30 June. This exemption can only be used once.

Members aged 75 and over cannot make NCCs under any circumstances other than downsizer contributions, which have separate rules.

If a member did not fully use their concessional cap in any year from FY2018-19 onwards, the unused amount accumulates and can be carried forward for up to 5 years. The oldest unused amounts expire first, which means they must be used before newer amounts.

Unused carry-forward amounts expire after 5 years. For example, any unused cap from FY2020-21 that has not been used will expire at the end of FY2025-26 and cannot be carried into future years.

Trustees can check their available carry-forward balance instantly in ATO Online Services via myGov - no manual calculation is needed.

To use carry-forward concessional cap space, the member's TSB must have been under $500,000 at 30 June of the prior financial year.

Members with a TSB of $500,000 or more at the prior 30 June are not eligible to use carry-forward amounts, even if unused cap has accumulated.

All usual concessional contribution rules still apply - the contribution must meet the conditions for concessional treatment and count toward the member's total concessional amount for the year.

A member triggers the bring-forward arrangement when they make NCCs in excess of the standard annual cap ($120,000) in a single financial year. Once triggered:

• The bring-forward period begins (2 or 3 years, depending on TSB)
• The total amount that can be contributed across the period is fixed at the cap applicable when the arrangement is triggered
• No further NCCs can be made above the bring-forward limit until the period ends

Members can also choose to make a single large NCC up to the maximum bring-forward amount in one year, consuming the entire period in a single transaction.

The amount available depends on the member's TSB at 30 June 2025:

A spouse contribution is an after-tax contribution made directly into the other person's super account during the current financial year. The contributing spouse may be eligible for a tax offset of up to $540 per year.

Eligibility for the tax offset:

• The receiving spouse must have assessable income (including reportable fringe benefits and reportable employer super contributions) of under $40,000
• The full $540 offset is available where the receiving spouse's income is under $37,000
• The offset phases out between $37,000 and $40,000 and is nil above $40,000
• The receiving spouse must be under 75 and meet any applicable work test requirements

The contribution is a non-concessional contribution for the receiving spouse and counts toward their NCC cap.

Contribution splitting allows a member to transfer up to 85% of their concessional contributions made in one financial year into their spouse's super account. It is not a new contribution - it is a transfer of existing concessional contributions already made.

Key points:

• The application must be made to the fund after the end of the financial year in which the contributions were made, and before the end of the following financial year
• The amount split does not count toward the receiving spouse's contribution caps
• The split reduces the contributing spouse's super balance
• The receiving spouse must be under preservation age, or between preservation age and 65 and not retired
• Contribution splitting does not affect the contributing spouse's own transfer balance cap position

Both mechanisms are commonly considered by couples where one spouse has a significantly lower super balance than the other - for example, where one partner has spent time out of the workforce for caring responsibilities.

The key differences in practice:

• Spouse contributions are made now, in the current year. The contributing spouse makes a new after-tax payment into the receiving spouse's account and may receive an immediate tax offset.
• Contribution splitting moves concessional contributions that have already been made. The application is made in the following financial year. There is no immediate tax offset - the benefit is building the receiving spouse's balance using amounts that were already in the fund.

Whether either option is appropriate depends on individual circumstances including income, tax positions, balance levels, and retirement timelines.

The government contributes 50 cents for every $1 of eligible personal after-tax contributions, up to a maximum of $500 for FY2025-26.

The maximum co-contribution is available to members with income at or below the lower income threshold. The entitlement phases out between the two thresholds and reaches nil at the upper threshold.

Income thresholds for FY2025-26:

• Lower threshold: $47,488 (full $500 co-contribution)
• Upper threshold: $62,488 (no co-contribution)
• Between $47,488 and $62,488: the co-contribution reduces proportionally

To receive a co-contribution, the member must:

• Make at least one personal after-tax contribution to super during the financial year - the contribution must not be claimed as a tax deduction
• Have total income below the upper threshold ($62,488)
• Have at least 10% of total income from employment, carrying on a business, or both
• Be under age 71 at the end of the financial year
• Not hold a temporary visa at any point during the financial year
• Lodge a tax return for the relevant year

The ATO automatically calculates and pays the co-contribution after the tax return is lodged. No separate application is required.

Downsizer contributions do not count toward the non-concessional cap and are not affected by the TSB thresholds that restrict standard NCCs. A member with a TSB above $2M can still make a downsizer contribution.

However, there are important considerations:

• Downsizer contributions are not tax deductible - they are after-tax contributions
• They count toward the transfer balance cap when eventually moved into pension phase
• They increase the member's TSB, which may affect eligibility for other contribution types in the following year
• They are not eligible for the government co-contribution

For a contribution to count in FY2025-26, it must be received by the fund by 30 June 2026. Key timing points:

• Cash contributions: Must be in the fund's bank account by 30 June. A payment initiated on 30 June may not clear until the following business day - it would count in the next financial year.
• Cheques: Must be received and deposited by 30 June. A cheque received after 30 June counts in the next year regardless of when it was written.
• BPAY and electronic transfers: Processing times vary. Initiate at least several business days before 30 June to ensure cleared funds by the deadline.
• In-specie contributions: Must be transferred to the fund by 30 June and properly documented, including a trustee resolution and a valuation at the date of transfer.

Several contribution options depend on the member's total super balance at the prior 30 June:

• NCC eligibility (cut-off at $2M)
• Bring-forward tier (determines the maximum NCC available)
• Carry-forward concessional contribution eligibility (under $500,000)

The relevant TSB is measured at 30 June of the prior financial year - not at the date the contribution is made. Trustees planning to make significant contributions should check their TSB position with their accountant or through ATO Online Services before acting, not after.