We thought you might appreciate a few end of financial year ideas to keep you on track and ahead of your financial game. How about saving on your tax now and enhancing that retirement nest egg by putting into place some of the strategies below.

Government Co-contribution
If you earn less than $31,920 the government will contribute $1.00 for every $1.00 you contribute to super, up to a maximum of $1,000. The Government's co-contribution is then reduced until your earnings reach $61,920 (including fringe benefits and employer super contributions) where no co-contribution is claimable.  
 
Concessional Contributions
Concessional contributions are contributions made by salary sacrificing if employed or by making personal deducted contributions if you are self-employed.  If you're over 50, you can still contribute up to $50,000 a year (under 50's are limited to $25,000). Super is one of the most tax-effective ways of holding assets until you retire. If we assume that your tax rate is 38.5% including medicare levy and you chose to contribute an extra $10,000 to super (vs taking it home as pay), let's look at the resulting tax position using super.


Tax payable on $10,000 at 38.5%

 

Net amount in pocket (as pay)

 

Tax payable in super at 15%

 

Net amount invested in super

 

Net position using super

 

$3,850

 

$6,150

 

$1,500

 

$8,500

 

+$2,350

 

Spouse super contributions
If your spouse earned less than $13,800, you can claim a tax off-set by making contributions into their super account. This is a tax offset (rather than a tax deduction) which means it's a direct saving against your tax liability. The maximum offset you can claim is $540 (based on a contribution of $3,000).

Offsetting capital gains tax if Self employed
If you've sold an asset during the year and realised a significant capital gain, by making a contribution to super, you may be able to offset any personal income tax that would have been payable on that capital gain (age-based super contributions limits still apply).

Other strategies you might consider;
  • Prepaying interest on your investment loans (get a deduction in advance)
  • Non-concessional contributions (paying super from after tax funds)
  • Transferring your non-super assets into your super fund

Don't wait until June 30th to start thinking about what you could be doing, you may miss the opportunities.


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