Being super smart before the end of financial year
Written by Shereen Churchill and Nick Lloyd (Financial Adviser)
We’re big advocates of the benefits of continually reviewing your situation to make sure you’re making the most of the available opportunities each year. The 30th of June is a key date as it signals the end of a financial year and the beginning of the next.
The importance of making the most of the opportunities prior to 30th June this year is just as important as previous years. This is because legislation changes over recent years have seen the Government cracking down on how much you can get into super. Why? Because its still the most tax effective vehicle for your retirement savings.
There are contribution rules and penalties for getting things wrong, so we always recommend getting personal financial advice based on your personal circumstances and objectives.
Here are 10 ideas that we will be considering with our clients this end of financial year:
- If you have close to $1.6m in super, it could be worth bringing forward contributions or you might miss out.
- If you are over 60 and resigned from employment, consider whether you can access your superannuation. Also give consideration to your eligibility to commence a retirement phase pension to obtain the tax-exempt status.
- If you have significant income or capital gains and have not been salary sacrificing consider claiming a personal tax deduction for super contributions up to the relevant concessional contribution cap. Contribution caps are currently (until 1 July 2018) a use it or lose it opportunity so don’t miss out on saving up to 32% tax.
- If you have an existing salary sacrifice arrangement in place giving you total concessional contributions close to the $25,000 per annum cap, review your salary sacrifice arrangements for the current and next financial year to ensure you don’t exceed the cap when your salary sacrifice contributions are combined with your employer SG super contributions. Given the change that enables everyone to make personal concessional contributions next year, you might want to consider cancelling it entirely.
- If you have excess savings or investments that you don’t need access to before retirement, consider transferring this wealth into super. This may reduce tax paid in your personal name and build your wealth for retirement.
- If your taxable income is less than $51,813 and you meet the works test, consider making a personal after-tax contribution to super. This may qualify you for a government-contribution of up to $500.
- If your spouse earns less than $40,000, consider making an after-tax contribution on behalf of your spouse. This will boost your partner’s super and reduce your tax. You may receive a tax offset of up to $540.
- If your spouse has less super than you, consider splitting up to 85% of a financial year’s ‘taxed splittable contributions’ with your spouse. This will help to even up your member balances or fund your spouse’s insurance premiums (if insurance is held inside their super fund).
- If you have a small business with turnover less than $10 million, consider making use of the $20,000 instant asset write-off. The reduction in tax liability frees up cash flow which can be used to sustain and/or expand your business.
- If you have an existing transition to retirement income stream (TRIS), consider the viability of continuing the TRIS given the loss of the tax-exempt treatment and the reduction in the concessional cap. Also give consideration to your eligibility to commence a retirement phase pension to retain the tax-exempt status.
Whilst these ideas might get you thinking, it is important to consider the full eligibility rules and the appropriateness of the strategy in line with your full situation and objectives. Contact us to find out how these ideas can work for you now and in the future.
This information has been prepared and issued by ITL Financial Planning and is current as at 9 May 2018. Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This Information may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. It should not be considered a comprehensive statement on any matter nor relied upon as such. ITL Financial Planning does not accept responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. The tax position described is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice.