End of Financial Year - Tips to get your best return
As we approach the end of the financial year, there are a few things you can do to boost your superannuation, and potentially get some tax savings or other benefits, if you take action before 30 June.
Did you know you can make $25,000 of concessional contributions each financial year? There are a number of contributions that are classed as ‘concessional contributions’ - you need to include employer SG (compulsory) contributions, other employer contributions, salary sacrifice to super and personal concessional contributions.
If you have funds available and room under your concessional contributions cap, you may want to consider making a concessional contribution to super. The amount that you make as a concessional contribution will be able to be claimed as a tax deduction and reduce your assessable income. Keep in mind that you will need to notify your super fund that you want to claim a tax deduction for this contribution.
A non-concessional contribution is a contribution from after-tax income where you do not claim a tax deduction. If your income is below $52,697, you may be eligible for the government co-contribution of up to $500 if you make a non-concessional contribution of $1,000. This is a guaranteed return and well worth the contribution, particularly to boost the super balance for those on low or no income.
Note: the maximum non-concessional contribution you can make in a financial year is $100,000 unless you use the bring-forward rule, however there can be restrictions.
A tax offset of $540 is available where an individual makes a contribution of $3,000 to their partner's superannuation. To be eligible, the partner's income needs to be below $40,000 for a part tax offset and $37,000 for a full tax offset.
Insurance within Super
There have been recent changes that may affect insurance through superannuation. If your super account has been inactive (not received a contribution) for 16 months, then any insurance, default or voluntary, will be cancelled as of 1 July 2019 unless you notify your fund in writing that you wish to retain your insurance.
For those with insurance within their superannuation - particularly if you are unable to obtain similar cover elsewhere (potentially for health reasons) - if you receive a letter from your superannuation fund asking if you want to retain your insurance it is important you contact your financial adviser as soon as possible.
Superannuation funds are still in the process of finalising their procedures for this as it is quite a recent change, and not all superannuation funds will notify your financial adviser that your account is inactive and your insurance will be cancelled.
This is not a comprehensive list of year-end superannuation strategies and is for general information only. To examine strategies that would be suitable for you, please contact the team at Rethink Financial Planning on 4962 4440 or fill out our Pre-appointment Questionnaire here and one of the team will be in touch.