10 "Super" things to do before 30 June

The 2016 May Budget threw a spanner in the works for people planning for their retirement, and with the looming Federal Election, we are in for some interesting times for Superannuation. But with 30th June just around the corner there are a few things you can do to build your retirement savings and save some tax.

Note: Many Super Funds use ‘clearing house facilities’ which means it can take up to 5 business days to process the contributions received. We recommend that you make your final 2016 contributions by no later than Friday 24th June to ensure your Super Fund records the contributions for this financial year.

  1. Maximise super contributions

A great way to build your retirement savings is to look at making the maximum contributions each year. The annual contribution caps are reset each financial year, meaning the unused portion of the caps do not roll over to another year – it’s a case of use or lose it (but that could change from 1 July 2017!!)

For small business owners and self-employed people, the added bonus of making super contributions is the tax deduction you can claim.

For the 2015/2016 financial year, the concessional (tax deductible) contribution cap is $30,000 if you are under age 49 at the start of the financial year, and $35,000 if you are aged 49 and over. Non-concessional (after-tax) contributions are capped at $180,000 with some special rules around age and aggregation. There are other aged based rules for both types of contributions as well.

Remember to carefully check what contributions have already been made for the 2015/2016 financial year as exceeding your annual contribution caps may lead to unintended tax consequences.

  1. Personal tax deductions

If you are self-employed you may be entitled to a tax deduction for concessional contributions if less than 10% of your taxable income, salary-sacrificed super and “reportable fringe benefits” arise from work as an employee.

If you have been contracting to the same employer all year, you will want to get some tax advice to make sure you will satisfy this test before making the contributions. The above annual contributions caps apply to self-employed people as well.

  1. Salary Sacrifice arrangements

Salary sacrifice arrangements are required to be put in place before the income is earned. So now is the time to review your arrangements, especially if you are going to be age 49 or older as at 1 July 2016, as the higher concessional contribution cap rate will apply to you.

  1. Insurance inside super

As mentioned, exceeding your contribution caps can lead to unintended tax consequences. One common way people exceed their contribution caps is by them, or their employer, paying for the life and disability insurance premiums not realising the policies may be held inside a super fund account. Each premium payment will be treated as a contribution and counts toward your annual contribution caps. If in doubt get it checked out!

  1. Government Co-contributions

Why not have the Government tip in some money into your super as well. To be eligible for the $500 Government co-contribution for the 2015/2016 financial year, you need to earn less than $50,454 and make a personal (after-tax) contribution of at least $1,000 to your super fund. While you may not be eligible, a spouse or family member working part time (even in the family business) could be.

  1. Low income super contribution

This concession is designed to pay up to $500 back to the super fund to offset the tax paid on concession contributions made during the 2015/2016 financial year. To be eligible you need to have income of less $37,000 with concessional contributions of at least $3,300. The LISC is reduces depending the amount of concessional contributions made.

  1. Spouse contributions

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 $13,800 and the contribution needs to be at least $3,000. There are other conditions as well.

  1. Contribution splitting

Another way to build your spouse’s super balance is where you ask your super fund to 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. 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).

  1. 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.

  1. Plan ahead for next year

Finally, now is the time to plan ahead. There are lots of opportunities for people to build and protect their retirement savings. Anyone reaching age 49, 60 or 65 during the 2016/2017 financial should be getting in front of their accountant or financial planner today as there are significant tax and super strategies that could be implemented.

For others, seeking advice early can set you on the path to financial security and it doesn’t hurt to have your financial plans reviewed on at least an annual basis. As they say “failing to plan, is planning to fail”.

If you would like to know more about superannuation please contact Jason McLaren on 0418 800 363 or visit our website at www.axiomsuper.com.au.

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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.