By Rod Myer
With the end of the financial year approaching fast, there are some important things you need to do to ensure you get the best out of your superannuation by June 30.
The super system has recently undergone some of the biggest changes in a decade, with many to come into effect in the new financial year.
If you don’t plan ahead you could miss out on savings opportunities and end up paying more tax. But you better move fast.
Salary sacrifice
Ross Clare, research director with the Association of Superannuation Funds of Australia, says now is the time for anyone wanting to make these contributions to check their situation.
If you have had regular salary sacrifice arrangements in place with your boss, or if you have just thought about it and would like to make a contribution, now is the time to review your situation, Mr Clare said.
“Act quickly to ensure you are not too late.”
If you are a big salary sacrificer on a high income you will also need to check that any extra payment you organise your boss to make for you before the end of the financial year does not breach the concessional (tax deductible) cap limits of $30,000 for those aged up to 49 and $35,000 for those aged 49-65.
From July 1 2017, this cap will fall to $25,000 for everyone, so you may want to get a move on to ensure your contributions are received by your fund before Friday, June 30.
Non-concessional contributions
If you have some extra cash at your disposal you might want to think about making an after-tax contribution to your super.
If you’re cashed up for some reason, you can take advantage of contribution caps while they’re at a very generous $180,000 a year.
From July 1 this cap will fall to $100,000 per year.
Spouse contribution
If your spouse will earn less than $13,800 in the current financial year you are entitled to make a superannuation contribution of up to $3000 on their behalf. In return you will get a $540 tax offset to use against your own tax bill. If that sounds attractive act now.
Insurance
It is also a good time to check the insurance cover in your super account to make sure it still fits your needs. Your needs change with your life circumstances and you can increase insurance by buying additional units of cover, generally at highly competitive rates in industry funds.
Tie up loose ends
Use the end of the year to optimise your super by going to the Commonwealth government’s MyGov website.
“Look up your super; find any unclaimed super you may have forgotten about,” Mr Clare said.
“Consolidating your accounts also makes sense as it means you pay less fees.”
You could also take the opportunity to make sure your employer has been making the contributions you are entitled to under the super guarantee by checking your account balances.
“It’s a bit tricky as they are legally required to be made only quarterly so you might have to wait till the end of July to see the full year’s situation,” Mr Clare said.
However, you will be able to check that most payments have been made and “it’s easier to remedy things after a couple of months than allowing them to run much longer”.
Low-income earners
The low income tax offset could earn you up to $500 from the government if you earn less than $37,000 a year. It ensures low-income earners don’t pay more tax on their super than on the rest of their income through the 15 per cent tax charged on super contributions.
Check your eligibility for this and also the co-contribution. Under these little-used measures, if you earn less than $34,454 and make an after-tax contribution of up to $1000, the government gives you a 50c in the dollar contribution into your fund.
So if you can afford to put a little aside you will get a boost you wouldn’t get otherwise.
Source: The New Daily
