Being super smart before the end of financial year
Written by 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. 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 are an employee, salary sacrificing up to the relevant concessional contribution cap.
- If you are self-employed or have significant investment income or capital gains (ie; less than 10% of your income comes from being an employee), claiming a personal tax deduction for super contributions up to the relevant concessional contribution cap. Contribution caps are a use it or lose it opportunity so don’t miss out on saving up to 34% tax.
- 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 $49,488 and more than 10% of this came from working, 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 $13,800, 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).
- Pay less to protect your family by holding your Life & TPD insurance through super. Life and Total & Permanent Disability (TPD) insurance can be held inside super where premiums are tax deductible, which can help make the insurance more affordable.
- Bring forward your tax deduction by pre-paying income protection insurance premiums. If you pre-pay 12 months’ worth of insurance premiums, you can bring forward the tax deduction and reduce your tax this year.
- Defer asset sales to reduce CGT (Capital Gains Tax). If you are planning on selling an asset just prior to 30 June, consider selling it a bit later to defer the capital gain, particularly if you might be earning less in the next financial year (eg; Retiring).
- Offset a capital loss against a capital gain to reduce CGT. If you have already realised a capital gain this financial year but are sitting on an unrealised loss, you could consider selling the loss making investment as part of reviewing your portfolio to offset the gain.
Whilst these ideas might get you thinking, it is important to consider 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.