- Maximise your super contributions
The concessional (tax deductible) contribution cap for 2022/2023 financial year is $27,500 for everybody.
Remember, you can also claim any unused portions of your concessional caps from previous financial years. This ‘carried forward’ concessional contribution rule works on a 5 year rolling basis for members with super balances below $500,000 as at 30 June 2022.
Non-concessional (after-tax) contributions are $110,000 for 2022/2023 financial year, but the ‘three (3) year bring forward’ rules still apply for those under 75 – with conditions.
| Your Total Super Balance @ 30 June 2022 | Bring Forward Available? |
| Less than $1.48 million | Access to $300,000 over 3 years |
| $1.49 million but less than $1.59 million | Access to $200,000 over 2 years |
| $1.59 million but less than $1.7 million | No bring forward – $100,000 NCC annual cap |
| $1.7 million or more | Nil cap |
If you are looking for that extra tax deduction or just want to give your super an extra boost – make sure your contributions are received by the super fund before the 30th June or otherwise you will miss out on this opportunity.
Remember to carefully check what contributions have already been made for the previous five (5) financial years as exceeding your contribution caps may lead to unintended tax consequences.
- Increase your personal tax deductions
One of the better changes to super law is now most employees can claim a personal tax deduction for super contributions they personally make. You will still want to get some tax advice on this beforehand as you may not be eligible for the tax deduction.
Remember – any personal contributions claimed as a tax deduction will count towards your $27,500 concessional contribution cap (or higher if you have unused concessional contribution cap as discussed above).
To claim a tax deduction you will need to notify your super fund and receive confirmation back from the super fund that they have accepted your form. Here is a link to the ATO specific form. We expect the ATO will continue to monitor this quite closely.
- Build your spouse’s super balance by splitting contributions
Did you know that you can split up to 85% of your concessional contributions and transfer them into your spouse’s super account? The strategy behind contribution splitting may be for estate planning purposes or to hedge against future legislation that reduces tax concessions on higher super balances.
Remember, the concessional contributions are counted towards your contribution cap even after the transfer to your spouse. There are some age and timing rules which you will need to some assistance with, hence why we tend to see this occur more in self-managed super funds (SMSFs).
- Rebalance spouses super accounts
There are a range of strategies where rebalancing accounts between spouses or de-facto partners (including same sex) makes sense. It can be an effective way of reducing Centrelink means tested assets, or allowing more super to be accessed earlier by the older spouse, or increasing women’s super balances where there is a gender gap. Rebalancing may involve recontribution strategies, transferring concessional contributions, or by using spare non-concessional contribution caps.
This may be of interest especially if you have total super balance of $1.7 million or greater or anticipate doing so in the coming years. There are some conditions you need to be aware of before implementing these strategies.
- Get a Government Co-contribution
Why not have the Government tip in some money into your super as well. While you may not be eligible, a spouse or family member working part time (even in the family business) could be.
To be eligible for the full $500 Government co-contribution for the 2022/2023 financial year, you need to:
- be under age 71 on last day of financial year; and
- earn less than $42,016 for 2022/2023 and
- make a personal (after-tax) contribution of at least $1,000 to your super fund.
The co-contribution tapers off to nil once you earn more than $57,016. As always there are some other conditions so speak to your accountant before making the contribution.
- Get a tax offset by making a contribution on behalf of your spouse
A little known tax offset is the spouse contribution tax offset. It works when you make a personal (after-tax) contribution on behalf of your spouse to their super fund.
For you to receive the maximum tax offset of $540, your spouse has to earn less than $37,000 and the contribution needs to be at least $3,000. The offset is tapered and cuts off once your spouse earns more than $40,000. Your spouse also needs to have a total super balance of less than $1.6 million as at 30 June 2020.
- Check who paid for your Super Fund life insurance premiums
Many people hold life, total and permanent disability and income protection insurance within their super fund. One common way people exceed their contribution caps is not realising that where they, or their employer, pay for the super fund premiums directly, these amounts are treated as contributions and are counted towards the annual contribution caps.
As mentioned above, exceeding your contribution caps can lead to unintended tax consequences. If in doubt get it checked out!
- Increase to the Super Guarantee contribution rate – 11%
From 1 July 2023 the super guarantee (SG) rate increases from 10.5% to 11%. You should factor this into any salary sacrifice arrangements you have in place or for your overall superannuation planning for next financial year as this may impact on your available concessional contribution cap.
This increase is part of the overall plan to increase SG to 12% by the 2025/2026 financial year.
- Make sure you have drawn down the minimum pension payments
For those receiving super pensions, especially from your SMSF, make sure you have received at least the minimum annual pension before 30th June. Failing to do so puts your SMSF at risk of losing its tax-free status on the assets supporting your pension. If you are not sure what your minimum annual pension is speak to your super fund administrator or accountant now.
Note: The COVID-19 50% discount for the minimum pension calculation will end by 30th June 2023. This means from 1 July 2023 expect the minimum pension amount for any Account Based Pensions you have to double as we revert back to the standard percentage factors.
You may need to review your super fund’s investment strategy to ensure you have adequate cash reserves or liquid assets to meet the higher pension payment levels.
- Plan ahead for next year
Lastly, now is the time to plan ahead. There are still lots of opportunities for you to build up and protect your retirement savings so get in front of your accountant or financial planner today to start the conversation.
How can we help?
If you would like to know more about Superannuation or Retirement Planning, please feel free to give Jason McLaren a call on 07 3338 8966. Jason is a licenced financial planner and can provide you with personalised financial advice through our other business Flow Financial Planning.
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The information contained in this article is general in nature and does not take into account your personal situation or objectives. You should not act on this information in any way before seeking professional advice from your accountant or financial planner.
