Being super smart before the end of financial year

Written by Shereen Churchill (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 11 ideas that we will be considering with our clients this end of financial year:

  1. If you have an account based pension, consider whether you need to adjust your pension payment strategy due to the cessation of the temporary reduction in minimum pension rates effective 1 July 2022. If the new minimum pension requirements are surplus to your needs, consider optimising the use of that surplus. You should keep in mind that the Government announced in its recent Federal Budget a proposal to extend the halving by a further year effective 1 July 2022.
  2. If you have significant income or capital gains consider your eligibility for claiming a personal tax deduction for super contributions up to the relevant concessional contribution cap. Don’t miss out on saving up to 32% tax this financial year.
  3. If you are considering additional concessional contributions to super this year but may have a higher tax rate in future years, consider your eligibility for delaying extra contributions by carrying forward the concessional contribution cap and enjoying higher tax benefits in the future.
  4. If you have an existing salary sacrifice arrangement in place giving you total concessional contributions close to the annual cap ($27,500), review your salary sacrifice arrangements for the current 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, you might want to consider whether it’s appropriate to cancel it entirely but thought needs to be given to the differences in work test requirements for the two contribution methods.
  5. If you have excess savings or investments that you don’t need access to before retirement, consider your eligibility for transferring this wealth into super. This may reduce tax paid and build your wealth for retirement.
  6. If your taxable income is less than $53,564 and you are working, consider your eligibility for making a personal non-concessional contributions to super. This may qualify you for a government-contribution of up to $500.
  7. If your spouse earns less than $40,000, consider your eligibility for making a non-concessional 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.
  8. If your spouse has less super than you, consider your eligilibity for 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).
  9. If you have an existing non-retirement phase income stream, give consideration to your eligibility to commence a retirement phase pension to obtain the tax-exempt status.
  10. If you are already over age 65 or you will be over age 60 after 1 July 2022, and, you are considering the sale of your home, consider whether you are eligible to make use of the downsizer contribution cap. This may reduce tax paid and build your wealth for retirement.
  11. If you are between the ages of 67 and 74 from 1 July 2022, consider your eligibility for making both concessional and non-concessional contributions. This may reduce tax paid and build your wealth for retirement.

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 30 March 2022. 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.