Probably many of you wouldn’t remember how much we can contribute into Super before 30th June 2007

Probably many of you wouldn’t remember, before 30th June 2007, people were allowed to contribute $1 million to Super as a non-concessional (after-tax) contribution and $105,000 as a concessional (deductible) contribution in one single financial year.

That amount of contribution sound insanely unreal to me still, back then, the planning was rather easy, you wait to last year before retirement, sell all your investments plus your cash and contribute them all into super to enjoy tax-free retirement for the rest of your life.


But soon from 1 July 2007, the after-tax contribution cap was reduced to $150k per year and the before-tax contribution cap was reduced to $50k. It has changed a few times along the way. Fast-forward to 2013 and the before-tax cap further reduced to $25k, from 2017, the after-tax contribution cap has been $100k per year.

The reason for the radical reduction is because the government believed the tax concessions in Super were largely favouring the wealthy to maximise the tax benefits. Last month, the Government has released another report called Retirement Income Review that Super system continues to benefit not only those on higher incomes but also providing too many tax concessions for the population. You can read it here https://treasury.gov.au/publication/p2020-100554

It is obvious that the government will not increase the existing Employer Super Guarantee of 9.5% and will not increase the contribution caps. The message is also clear that you’d better rely on yourself for the desired retirement as the government will not force you to save for retirement by Super. Therefore, the tax-effective super strategies will be even more important in your planning into retirement, given it is current contribution caps, we will need to plan early and plan harder to be able to accumulate more tax-effective retirement funding for a confident and comfortable retirement going forward…

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