With the end of the 2022-23 financial year fast approaching, make sure you don’t miss out on the opportunity to utilise these superannuation strategies before 30 June. If you do, you will increase your retirement savings and potentially save on tax.
1. Get a Super Top-up from the Government
If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government may also make a contribution (called a co-contribution) up to a maximum amount of $500.
For the current financial year 2022-23, the Lower Income Threshold is $42,016 and the upper Income Threshold is $57,016. The amount of government co-contribution you receive depends on your income and how much you contribute.
i. Refer to the table below for a few examples:
| Income |
Personal super |
Personal super contribution of $500 |
| $42,016 or Less | $500 | $250 |
| $45,000 | $401 | $250 |
| $50,000 | $234 | $234 |
2. Boost your Spouse’s super and claim a Tax Offset for yourself
If your spouse earns a low or no income, you may be able to claim a tax offset if you contribute to their super fund. This could score you a tax offset of up to $540.
You may be able to claim either a:
- Full Tax Offset of $540, if you pay $3,000 or more and your spouse earns $37,000 or less.
- Partial Tax Offset, if you pay less than $3,000 and your spouse earns more than $37,000 but less than $40,000.
3. Split your contributions with your spouse to equalise super balances
You can split up to 85% of concessional contributions (up to the concessional contribution cap) made during a financial year with your spouse, provided they are not over the age of 65 or reached their preservation age and retired.
The application to split contributions must generally be made before the end of the financial year, immediately after the financial year in which the contribution was made.
4. Contribute to Super and claim a Tax deduction
By contributing some of your after-tax income or personal savings into super, you may be eligible to claim a tax deduction. The contribution is generally taxed at up to 15% in the fund (if you earn over $250,000 this may be up to 30% or more under the Division 293 tax rules).
To claim a deduction, you must submit a valid “intent to claim deduction” notice to the Super Trustee and have it acknowledged by them. Keep in mind that personal deductible super contributions count towards your annual concessional contributions cap.
Concessional contributions include all employer contributions, including Superannuation Guarantee and any Salary sacrifice contributions. The concessional contribution cap is currently $27,500. Any contributions you make above this limit may attract additional tax if you are not able to access the unused (or catch-up) contributions from previous years.
Catch-up concessional contribution can accrue from 2018/19. Unused cap amounts can be carried forward for up to five years before they expire. To be eligible to make catch-up concessional contributions, one criteria is your total super balance must be below $500,000 at the prior 30 June.
ii. Take a look at this scenario: Sam has funds he can contribute towards super.
| Contributions from employer and Salary Sacrifice | TSB at end of previous financial year 2022 | Unused concessional cap accumulation |
|
SG $10,000 + Salary Sacrifice $20,000 TOTAL = $30,000 |
$490,000 (30/6/2022) |
$67,000 + $27,500 -30,000 = $64,500 |
| Because Sam’s Total Super Balance (TSB) at 30 June 2022 was less than $500,000, he can use the unused cap amounts and contribute up to $94,500. | ||
5. Make a one-off Super Contribution
After-tax (or non-concessional) super contributions are made with money you’ve already paid income tax on such as personal savings. They are contributions you won’t be claiming a tax deduction for.
The annual limit for after-tax contributions for people under age 75 is currently $110,000, which provided your total super balance is below $1.7 million at the start of the financial year.
In some circumstances, you can bring forward three years of after-tax contributions into one year. This is known as the bring forward provision. It allows you to contribute up to $330,000 if you haven’t triggered the provision in the previous two years and your total super balance is below $1.7 million.
Your personal cap may be different, particularly if you already have a large amount in super, so it’s a good idea to talk to us before contributing.
6. Downsizer Contribution
Downsizer contributions are another option if you’re aged 55 and over and plan to sell your home. The rules allow you to contribute up to $300,000 ($600,000 for a couple) from your sale proceeds.
By utilising any one of these superannuation strategies it can give your retirement savings a healthy boost!
If you would like to discuss EOFY super strategies or your eligibility to make contributions, don’t hesitate to give us a call 1300 120 455 or speak to your Quest Adviser.
Information in this article has been sourced from the ATO – Australian Taxation Office.
i. https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Super-co-contribution/
The figures are based on assumptions and are general illustrations only. They are intened to illustraite the broad impact of certain choices made and are not a prediction of user’s final benifet or posistion. They are not intented to be substitute for professional financial advice. The projection result is not gauranteed in any way. The actual performance of investments will depend on future enconmic conditions, investment management and futuree tatation.