End of Financial Year Contributions.

As we approach year end, it’s timely to prompt you to consider super contributions pre 30 June.

Superannuation contributions can be a tax effective way of boosting retirement savings. You do need to remember that typically super contributions are “preserved” (locked in and not accessible) until at least age 60.

Some of the contributions to consider:

Tax Deductible Personal Contributions
You may be eligible to claim a tax deduction for personal superannuation contributions thus reducing the tax you pay. Age, income and the amount of contributions paid via your employer (including salary sacrifice) will impact the amount you may contribute. 

Catch Up Contributions
There is a new an opportunity to contribute more than the annual concessional contributions cap of $25,000 per financial year. Where you don’t contribute up to the cap in a previous year, the surplus of the previous year’s cap can be added to this year’s cap. This strategy is only available where superannuation balances are less than $500,000.

It can be a great way to help manage capital gains tax on a property sale.

Government Co-Contribution
The Government Co-Contribution, of up to $500, is a good boost for eligible individuals who contribute $1,000 from after tax money. 

You must be aged below 71 as at 30 June 2020, derive at least 10% of your income from employment and have a superannuation balance less than $1.6 million at the start of the financial year.

The maximum co-contribution of $500 is available where you earn less than $38,564.  The co-contribution reduces as your annual income rises and ceases at $53,564.

Spouse Superannuation Contribution
If your spouse or partner’s “income” is less than $40,000 in a financial year, you can make a spouse contribution and you will be entitled to a tax offset. The maximum spouse contribution that is eligible for the tax offset is $3,000.  

The maximum tax offset available is $540. The offset will progressively reduce where income is between $37,000 and $40,000.

Non Concessional Contributions
You may wish to consider making an after tax or non concessional contribution to increase the funds you have in the tax effective superannuation environment. The cap is $100,000 per financial year and ‘bring forward’ provisions may allow you to contribute up to $300,000 but there are limits and restrictions.

Downsizer Contributions / Older Australians
This is available to those over age 65 who sell their principal residence. There are a number of criteria and strict time frames which must be satisfied to do this.

Salary Sacrifice Contributions
Salary sacrifice is an arrangement where part of your pre-tax wage or salary is paid to your superannuation fund rather than being received as take-home pay. It is a tax effective way of boosting superannuation. Cash flow needs are important when evaluating whether this is appropriate. Given the time of year, this may be a strategy to look at for after 1 July.

Salary sacrifice contributions count towards your annual ‘concessional’ contributions cap of $25,000 per annum (as do employer contributions and personal deductible contributions). You should be aware there are consequences should you exceed the cap.

If you’d like to speak with me about any of these options and what you could do, or are keen to book a Discovery Meeting please send me an email: bruce@highview.com.au.

Stay safe.
Bruce Chisholm
Financial Planner

Authorised Representative No. 1235025 of InterPrac Financial Planning Pty Ltd Licence No. 246638. Highview Wealth Solutions Pty Ltd Trading as Highview Accounting & Financial.

Bruce has written his article for general information purposes only and it does not constitute personal advice. This information has been prepared without considering any individual’s objectives, financial situation or needs.  You should not act solely on the basis of material contained in this article.  We recommend that formal advice is sought which considers all your individual objectives and needs.