Boost your super savings before 30 June
Superannuation isn’t just a great way to save for your retirement. There are a number of ways it can benefit you now, such as making your income more tax-effective.
With 30 June approaching, now is a great time to think about how you can boost your super savings this financial year and make some smart decisions about your financial future.
There are many tax-effective strategies you can implement before the end of financial year. These opportunities will be different for everyone, so it’s important to get personal advice about what’s best for you.
Our top five year-end superannuation strategies are:
1. Salary sacrifice
Salary sacrifice means asking your employer to put some of your before-tax income into your super. Salary sacrifice contributions are classified as concessional contributions and are generally taxed at 15% - which may be much less than your current marginal tax rate.
Whether salary sacrifice is right for you will depend on your personal circumstances and level of income. You also need to be careful not to breach the current $25,000 cap (or $35,000 if you're over 60) on before-tax contributions, which includes any Super Guarantee contributions your employer makes on your behalf.
2. Claim a tax deduction on your super contributions
Personal super contributions made before 30 June, may be claimable as a tax deduction in your tax return. The amount you claim as a tax deduction will generally be taxed at 15% - which may also be much less than your current marginal tax rate.
This strategy is ideal for people running a business as a sole proprietor or in partnership, as well as some retired or unemployed people. Please seek advice however to ensure this is an appropriate strategy for your situation as not everyone can claim this deduction.
3. Protect your family
Underinsurance is a major issue in Australia, and this can be frightening for you or your family if you were to get very sick, pass away or become disabled.
You may be able to get adequate life insurance cover, and pay less for premiums, by purchasing insurance through your super. This involves holding life insurance via your super account and using a portion of your super contributions or account balance to pay for the premiums, rather than paying for the premiums from your after-tax money.
This strategy may also reduce your premiums because the super fund is buying the insurance ‘in bulk’. However, we caution that this strategy may not be suitable for everyone and we recommend you seek personal advice about your insurance needs.
4. Take advantage of Government concessions
Many people can take advantage of the Government concessions available to increase their super savings, such as the Government co-contribution scheme.
If you are a low to middle income earner and eligible for the co-contribution, the Government currently contributes up to $0.50 for each $1 of personal after-tax contributions you make to your super. This could mean up to an extra $500 in your super account.
5. Boost your spouse’s super savings
If you have a low income-earning spouse, you can help top up their retirement savings by tax-effectively contributing to their super – with a tax offset of up to $540 available.
In certain circumstances, you could also split your employer super contributions or personal deductible contributions with your spouse. And if you split contributions with an older spouse, it may mean accessing tax-free benefits sooner.
Act now so you don’t miss out
To find out which year-end super opportunities are best suited to your situation and goals, contact us on 02 9455 0655 for an obligation free appointment.
This material is current as at April 2014, but may be subject to change.
This information is of a general nature and has been prepared without taking account of your personal needs, financial circumstances or objectives. Before acting on this information you should consider whether the information is appropriate for you having regard to your personal needs, financial circumstances or objectives. Please see us for advice taking into account your individual circumstances. This information is also our interpretation of the law and does not represent tax advice. Before making any financial decision, we recommend you obtain professional financial and taxation advice specific to your circumstances.
In : Superannuation
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