Take advantage of capital gain with catch-up contributions

large capital gain from the sale of an investment property, shares or managed funds is an ideal scenario to take advantage of concessional and catch-up contributions, a superannuation specialist said.

Scott Brown, superannuation specialist with MLC, said on a recent webinar that catch-up concessional contributions allow individuals with unused super contribution caps and a super balance under $500,000 to contribute more to super in certain years.

He said this strategy is especially useful in years when someone has unusually high taxable income, such as from capital gains or increased business profits, as it helps reduce taxable income while boosting superannuation in a concessional environment.

Furthermore, he said, different groups that may benefit from the strategy include those with large capital gains, self-employed individuals, retirees (subject to work test rules), and non-residents earning Australian rental income.

“In those years where we have these large capital gains, if our balance was less than $500,000 in super, and we might have assessable income of $300,000, if we could knock off $100,000, just as an example, that’s reducing how much of your taxable income would be assessed at marginal rates, while also boosting your super to increase that retirement wealth, and obviously have that money in that low-taxed environment of super,” he said.

“Anyone with a capital gain that’s eligible, that’s what we’re looking at, but do we want to do it in the current year, because we’ve sold the asset this year, or do we want to delay it to next year because that is the year we’re going to sell that asset?”

Brown said, the strategy is also an option for self-employed people, predominantly sole traders and those working in partnerships that don’t have super guarantee obligations.

“They’re obviously going to have years that have more revenue, more profits and a lot of the years they’ll be putting that money straight back into their business,” he said.

“But potentially, some years they’ll have an additional amount that they might be able to put into super. If they haven’t been making, or they haven’t had any SG, and have had many personal contributions over the last few years, then they might be able to put a large chunk in under that catch-up measure.”

Additionally, with the abolition of the work test, concessional and catch-up contributions can also be used strategically by those under 67 including those that are retired.

“Where those people have got that assessable income, they can definitely use the catch-up measure. For those 67-75 years we have to do the work test in relation to personal deductible contributions,” Brown said.

“For people who are working, they can salary sacrifice or have their SG going in, but for people that aren’t working to a large degree, we know you have to at least meet 40 hours over a 30 consecutive-day period for the work test to get those contributions in. Clients in that scenario, where they’re retired, and are over 67 and might not have made many contributions over the previous years, if they can meet the work test, they get a large chunk into super and reduce that taxable income in that year.”

Brown said one group of members that is often overlooked in regard to concessional contribution strategies is non-residents with property income.

“If you think about financial assets that we might have in Australia, or the income from those financial assets, they’re assessed in the country of residence. The worldwide income in the country of residence is generally where that’s all taxed, but it’s different for direct property,” he said.

“For example, someone who might have given up their primary residence while they’ve gone overseas to work for two years and who may rent it out, for a non-resident from dollar one, the tax rate is 30 per cent, and there is no Medicare levy payable. Every time they can make a deductible contribution into super where it is 15 per cent tax, they can obviously halve the amount of tax that they would pay on some of that rental income they’re receiving as a non-resident.”

Keeli Cambourne

March 6 2026

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