Very few younger people make extra voluntary superannuation contributions. Yet it makes sense to add extra contributions because the amount channelled into super by retirement time converts into a totally tax-free investment paying a tax-free income.

People fail to take up this opportunity because retirement is too far away. They have mortgages to pay, children to raise, and a life to enjoy.

However, as they age, they receive promotions and pay rises, their children leave home, and they pay their mortgages off. Eventually they reach a point when they do have surplus income that could go into their super accounts.

Several years ago the Government introduced new rules that allow people with lower super balances to catch up on contributions they were entitled to make in the past but didn’t. It isn’t an unlimited entitlement but is a very helpful step in the right direction.

Those whose super balances were less than $500,000 on June 30 last, can catch up contributions they missed during the past five years. In this financial year they can catch up on contributions they missed in the 2019-20 financial year, and all years since.

Now for the first time since the rules were introduced, a year of catchup entitlements is about to drop off and be lost forever. From July, the entitlement relating to 2019-20 will disappear.

The maximum tax-deductible amount that a person can contribute to super in a year is $30,000. This includes employer super guarantee (SG) amounts, currently 11.5 per cent of salary. So the amount of voluntary contributions allowed is $30,000 less the employer amounts.

For example, if a worker’s employer SG contributions are $10,000, they can only contribute an extra $20,000. However, if their super balance is below $500,000 and they have a high income and need tax deductions, they can also put in extra amounts relating to the 2019-20 financial year.

The entitlement relating to the oldest year drops off first, then the next oldest, and so on. So the 2019-20 amount will soon be permanently lost. Therefore it makes sense to try to catch up at least that amount before June 30.

This can be done by making a lump sum super contribution from savings in the bank and claiming a tax deduction for it, using the required ATO form. That will generate a large tax refund.

It could also be done by living off savings until June 30 and sacrificing the whole of one’s salary into super. People with higher incomes should find a way to utilise that early year’s contribution entitlement now. The exact amount available is in ATO records accessible via MyGov accounts.