Bump up your super and reduce your tax bill before 30 June

AS we head toward the end of the financial year on 30 June, now’s the time to think about strategies to put in place to reduce the tax you pay and boost your retirement savings.

MyState financial planner Lonnie Weeks said the rules had changed this year to allow more people to make additional contributions to their super fund and get a tax benefit.

“More people are now eligible to claim a tax deduction for personal super contributions,” he said.

“So, if you add say $10,000 extra to your super you may be eligible to claim a tax deduction for this amount.

“This is a new rule so we’re trying to make people aware of it so more Australians will take advantage of it.

“Some people, especially those approaching retirement, may benefit from making personal super contributions.”

New rules help retirement savings

Other super rules are also changing to make it easier for people to add to their retirement savings.

For instance, from 1 July 2019 eligible people will be able to make “catch-up contributions” to their super fund*.

Here’s how this will work.

At the moment, the concessional contribution limit (the amount you can contribute to your super fund on a before tax basis) is $25,000 per financial year.

Let’s say next year, the 2018/2019 financial year, you contribute $15,000 to your super fund on a concessional basis, including your employer’s superannuation guarantee contribution to your super fund.

That means you have an extra $10,000 you can contribute in future years, given you have not contributed up to the full $25,000 concessional limit.

“This may be a really useful provision for people who have received a windfall, for instance from an inheritance or redundancy, especially if they are nearing retirement and wanting to bump up their Super,” Mr Weeks said.

If you contribute to the full $25,000 concessional limit, under the non-concessional limits eligible people can still contribute up to $100,000 this year.

Or, using the bring-forward provisions, add up to $300,000 to your super fund over three years.

Eligibility criteria apply to both concessional and non-concessional contributions.

While there are certainly steps people can take now to reduce this year’s tax bill and add to super, Mr Weeks said it was a good idea to use the start of the next financial year to plan your extra super contributions for the year.

“At the start of the financial year you can look at what you earn on an annual basis and work out how much you can salary sacrifice across the year,” he said.

“That way, the money will go directly into your super fund each time you get paid.”

There are many different steps people can take to boost their retirement savings.

The idea is to do your planning at the start of the financial year, work with a financial planner on how much you can contribute so that next financial year, your super balance is in the best possible shape.

If you need help creating a plan to boost your retirement savings, contact Matthew Khourey at MyState Wealth Management by phoning 1300 651 600 or visit mystate.com.au/wealth.

You will only be able to carry-forward your unused concessional contributions cap if your total superannuation balance of less than $500,000 (standard contribution eligibility rules apply). Information is current as at 14 May 2018. It is recommended that you seek independent tax advice. This is general advice only and does not take into account your personal objectives, financial situation or needs and you should consider whether it is appropriate for you.