There have recently been some significant changes to superannuation rules, so as the end of financial year approaches, now is a good time to see if any of these changes may be applicable to you.
Below are a few bullet points outlining the main end of financial year strategies specifically relating to superannuation that may be of interest. You can click on the ‘learn more’ button on each strategy to visit the relevant section of the ATO website should you require further information.
These end of financial year strategies cover both concessional contributions (where a tax deduction is claimed) and also non concessional contributions (where no tax deduction is claimed).
If you would like to book a time to discuss any questions you have, or a more detailed review call, you can schedule a call or Zoom meeting on my website here: https://bpmfinancial.com.au/book-an-appointment/
Please note that the content of this communication should be treated as general advice given it does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.
Pay extra into super and claim a tax deduction
If you pay money into super from your after-tax income or personal savings, you can now claim those contributions as a tax deduction – previously this was only available for self-employed people but is now an option for regular employees as well. Remember that these personal (concessional) contributions count towards your concessional contribution cap of $25,000 per annum. Any contributions your employer makes as part of your 9.5% super guarantee also counts towards this $25,000 concessional contribution.
Make a catch up concessional super contribution in excess of the $25,000 cap
If you didn’t use your whole $25,000 concessional cap in the 2018/19 year you may now have the ability to “carry forward” any unused cap and use it in the following years by making a catch up payment. If your total superannuation balance is less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute in excess of the $25,000 annual concessional limit by making use of any previously unused amounts.
Maximise non-concessional contributions to super
If you are under 65 years of age, you can make a non-concessional contribution to super up to 3 times the annual limit of $100,000 – so $300,000 – in the one year, under what is often referred to as the ‘bring forward’ rule. The ‘bring forward’ rule is triggered when you make a contribution greater than the annual cap of $100,000, allowing you to automatically gain access to your future year’s caps.
Get a free top up from the government
If your taxable income is going to be less than $53,564 for the financial year and you make an after-tax contribution to super of $1,000, the government may also make a contribution on your behalf (referred to as the government co-contribution) up to a maximum of $500.
Top up your spouse’s super and save some tax
If your spouse’s assessable income is below $40,000 for the financial year and you make a $3,000 spouse contribution to their superannuation account on their behalf, you may be entitled to claim a tax offset of up to $540 (18% of the $3,000 amount). Remember tax offsets (also called tax rebates) reduces the amount of tax you pay.
If you are over 65 years of age and are downsizing your home you can contribute the proceeds from the sale of your home to super
If you are 65 years or older and meet the relevant eligibility requirements, you can make what is known as a downsizer contribution, allowing you to contribute up to $300,000 from the sale of your home into superannuation. Both members of a couple can make this contribution, meaning up to $600,000 can be contributed and the downsizer contribution does not count towards other relevant contribution caps. You can even make this downsizer contribution if your superannuation balance is greater than $1.6 million.