Got a spare million bucks? you can get it into superannuation fast

Generous and flexible rules around superannuation contributions mean you can get money into a zero-tax haven fast. Here’s how.

Superannuation’s rules change more times than some people change their underwear, but it remains the best place to hold your life savings because of its great tax rates.

There has been fiery debate this year about government plans to slap higher taxes on people with super balances above $3 million, but in the background other positive rule changes are coming that help the vast majority of Aussies with vastly less than $3 million.

Higher compulsory super – rising to 12 per cent from July 2025 – and moves to time employer super contribution in line with paydays are among the welcome changes for millions of savers.

The average super balances are about $190,000 for men and $151,000 for women, according to ATO data, and the median balances are much lower still – $56,000 and $46,000 respectively.

Average balances should grow sharply in the coming decades as higher employer contributions combine with Australians’ desire for comfortable retirement lifestyles that require much more than the age pension.

And while most of us won’t get to that $3 million level where Labor’s new 15 per cent tax kicks in, we should still be aiming to put plenty into super ahead of retirement.

The reason is simple: zero tax. Once you switch your superannuation from its accumulation phase to pension phase after age 60, there is no tax on earnings, capital gains and withdrawals for most Australians.

Selling assets and pumping the proceeds into super can be a smart strategy. Picture: iStock

This zero-tax rate applies to up to $1.9 million of super held in an account-based pension. That’s per person, so a couple retiring today could hold $3.8 million in tax-free super.

Money can be injected into super much faster than most people think, thanks to a wide range of strategies, caps and limits that financial planners often navigate with their clients.

As people near retirement, and in the early retirement years, it may be wise to sell some non-super assets such as shares or investment properties and funnel that cash into the superannuation tax haven.

In fact, a couple can pump almost $1 million into their super fund in just one year and one day, playing by the generous contribution rules, and assuming they have a spare $1 million.

Here’s how it works.

Everyone has a $27,500 annual cap on concessional super contributions, which are tax-deductible contributions such as employer payments or salary sacrifice.

On top of that there are non-concessional contribution caps of $110,000 per year per individual, and two extra years of these are allowed to be brought forward in a lump sum – totalling $330,000 per person in one financial year.

This means that a couple can pump $220,000 into their super via non-concessional contributions on June 30, then another $660,000 on July 1 as the next financial year starts.

That’s $880,000 of super contributions, and each person also gets their $27,500 concessional contribution limit each financial year – adding another $110,000 to produce a grand total of $990,000.

Okay, so $990,000 is not quite $1 million, you may argue. But many Australians are also allowed to make catch-up super contributions of their recent years’ unused concessional contributions caps, as long as their balance is below $500,000 at the previous June 30.

That could easily push a couple’s total injection above $1 million.

Of course, many people do not have a lazy $1 million able to pump into their nest egg, but the illustration serves as an example of super’s flexible rules for those who invest well, plan well and save hard for their retirement.

Originally published as Got a spare million bucks? you can get it into superannuation fast