With June 30 fast approaching, it’s time to start thinking about your super for another year. We’ve put together five smart strategies that may benefit you now and help boost your super.
- Add to your super and get a tax deduction
| This may be right if you… | Are employed, self-employed or earn taxable income (including realised capital gains) from other sources e.g. shares |
| How to use this strategy | Make an after-tax super contribution and notify the fund how much you will claim as a tax deduction |
| The benefits may include | · Paying less tax on your income
· Increasing your retirement savings |
- Get more from your salary or bonus via salary sacrifice to super
| This may be right if you… | Are an employee |
| How to use this strategy | Arrange for your employer to contribute some of your pre-tax salary or a bonus into super, as part of a salary sacrifice agreement |
| The benefits may include | · Paying less tax on your salary or bonus
· Increasing your retirement savings |
- Convert your non-super savings into super savings
| This may be right if you… | Have money outside your super1 that you’d like to invest for retirement |
| How to use this strategy | Make an after-tax super contribution |
| The benefits may include | · Paying less tax on investment earnings
· Increasing your retirement savings |
- Get a super top-up from the Government
| This may be right if you… | Are employed or self-employed and have income2 less than $57,016 pa |
| How to use this strategy | Make an after-tax super contribution |
| The benefits may include | · Receiving a Government co-contribution of up to $500
· Increasing your retirement savings |
- Boost your spouse’s super and reduce your tax
| This may be right if you… | Have a spouse whose income2 is less than $40,000 pa |
| How to use this strategy | Make an after-tax spouse contribution into your spouse’s super account |
| The benefits may include | · Receiving a tax offset of up to $540
· Increasing your spouse’s retirement savings |
The tax advantages of saving in super
Saving more in super can come with tax and other benefits this financial year but that’s just the start.
Once money is invested in super, earnings are taxed at a maximum rate of 15% instead of your marginal tax rate, which may be up to 47%3.
This low tax rate may help you build up savings for your retirement.
When you do retire, you can also transfer your super into a ‘retirement phase’ pension4. Here, you won’t pay tax on investment earnings and any pension payments you receive from age 60 onwards are tax-free.
Tips and traps
Before you add to your super, keep in mind you won’t be able to access the money until you meet certain conditions.
There are caps on how much you can contribute to super each year. It’s important to take the caps into account, as penalties may apply if you exceed them.
Make sure any contributions you want to make this financial year are received by your fund before June 30. With electronic transfers, the contribution takes effect the day your super fund receives the money, not the day you make the transfer.
Other eligibility criteria and conditions (including timing requirements) may apply in relation to these strategies. Further information can be found on the Australian Taxation Office website, ato.gov.au.
Getting advice
You’ll need to meet certain conditions before you can benefit from any of these strategies. A financial adviser can help assess your eligibility for using these strategies, explain the different options available to you in detail and help you decide which strategies are appropriate for you.
Book a time to chat here, and we’ll talk about what’s best for you.
Source: Actuate Alliance Services Pty, a related entity of Insignia Financial
