Last minute planning: Four things you can still do before 30 June
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The end of the financial year is fast approaching, and we want to make sure you’re making the most of your super opportunities.
The more you can boost your super, the better. There are usually tax incentives when you contribute to super and keep in mind that once your money is invested, the earnings are taxed concessionally.
Even better, for most people over 60, your income and withdrawals are tax free during your retirement.
Here are four things you can still look into before 30 June.
Maximise your tax-deductible contributions
You may still be able to save tax and boost your super at the same time with a personal deductible contribution.
This year the annual contributions cap on pre-tax super contributions for anyone under 75 is $25,000.
If the sum of your employer contributions made this year is less than $25,000, you should look seriously at topping up your super. Your employer contributions include all of the super guarantee payments as well as any salary sacrifice deposits so be careful not to exceed the limit.
Take advantage of the super co-contribution
If you make a small after-tax contribution you may still be eligible for something extra from the government.
When your total income is less than $38,465 a year and you make an after-tax contribution of $1,000 you will receive an additional co-contribution of $500 paid by the government into your super account. That’s an immediate and risk-free return of 50% on your money.
The amount of the government co-contribution phases out on a progressive basis as your income increases, so you will still receive some benefit if your annual income is less than $53,564.
Make an eligible spouse contribution
If your spouse earns less than $40,000 a year you may be eligible for a tax offset if you contribute to super on their behalf.
How it works is simple. If you contribute up to $3,000 into your spouse’s super account and they earn less than $37,000 during the year you will receive a tax offset of up to $540. That’s a return of up to 18%. Like the super co-contribution, the tax offset phases out progressively, in this case as your spouse’s income increases.
Even up your super balances by super splitting
When you split your super contributions, you transfer a portion of the contributions you have recently made to your super account, to your spouse’s super account.
There are lots of reasons to equalize your super balance with your spouse. Maybe one of you is older and able to access the money earlier, perhaps you are pushing the tax effective limits of super, or you just want to share the wealth you’ve built over a lifetime together.
If you ask your super fund before 30 June, up to 85% of the contributions you made last financial year can be transferred to your spouse.
Tax time catches up with all of us sooner than we expect. While it’s good to be organized early, it’s nice to know it’s never too late to plan. That’s why when you engage with When Financial Solutions, it’s not a matter of ‘if’ you will make the most of your super opportunities, but ‘when.’
Michael Bowman and James McMaster are co-founders of When Financial Solutions. This article is general and does not consider your personal circumstances. If you would like advice specific to you please give us a call.