We’re on the home stretch now towards the end of the 2017-18 financial year. With just under six weeks to go and a number of significant changes coming up. We have shared 3 superannuation strategies you may want to consider in order to boost your retirement savings and maximise any Government entitlements.
- Add to your super – and claim a tax deduction
This financial year, there are new rules about who can claim a deduction for personal (after tax) contributions to super.
For Employees (people who work for someone else), in the past, you could only claim the deduction if you earned less than 10% of your income from employment. But from 1 July 2017, deductions for personal contributions can also be claimed by employees.
How it works
If you contribute some of your after-tax income or savings into super, you may be eligible to claim a tax deduction. This means you’ll reduce your taxable income for this financial year – and potentially pay less tax. And at the same time, you’ll be boosting your super balance. The contribution is generally taxed at up to 15% in the fund (or up to 30% if a higher income earner). Depending on your circumstances, this is potentially a lower rate than your marginal tax rate, which could be up to 47% (including the Medicare Levy) – which could save you up to 32%. Once you’ve made the contribution to your super, you need to send a valid ‘Notice of Intent’ to your super fund, and receive an acknowledgment from them, before you complete your tax return, start a pension, or withdraw or rollover the money.
Keep in mind that personal deductible contributions count towards the concessional contribution cap, which is $25,000 for this 2017/18 financial year (which also includes all employer contributions, including Superannuation Guarantee and salary sacrifice). Penalties may apply if you exceed the cap – so it’s important that you stay within the limits.
- Get a super top-up from the Government
If you earn less than $51,813 in the 2017/18 financial year, and at least 10% is from your job or a business, you may want to consider making an after-tax super contribution. If you do, the Government may make a co-contribution of up to $500 into your super account.
How it works
The maximum co-contribution is available if you contribute $1,000 and earn $36,813 pa or less. You may receive a lower amount if you contribute less than $1,000 and/or earn between $36,814 and $51,812 pa.
Be aware that earnings include assessable income, reportable fringe benefits and reportable employer super contributions. Other conditions also apply – speak to your financial planner to find out more.
- Boost your spouse’s super and reduce your tax
If your spouse is not working or earns a low income, you may want to consider making an after-tax contribution into their super account. This strategy could potentially benefit you both: your spouse’s super account gets a boost, and you may qualify for a tax offset of up to $540.
How it works
The income thresholds increased on 1 July 2017. So now, you may be able to get the full offset if you contribute $3,000 and your spouse earns $37,000 or less pa (including their assessable income, reportable fringe benefits, and reportable employer super contributions). A lower tax offset may be available if you contribute less than $3,000, or your spouse earns between $37,001 and $39,999 pa.
If you would like to know more about how you can use these end of financial year strategies or how they may affect you, please contact us.
