Making contributions into your super can be a great way help boost your income in retirement. What’s more, the sooner you start, the greater the impact could be.
With the End of the Financial Year fast approaching, here are some handy reminders of the ways you can add extra funds into your super accounts.
Make your contributions before 30 June
If you want to have a super contribution counted in the 2019/20 financial year, you need to ensure your super fund receives it by 30 June 2020. This is particularly important if you plan to claim a tax deduction for any of your contributions (see section below).
The key date for making contributions is not when you make the payment, but when it’s received by your super fund. Even though many banks and financial institutions now offer instant payments, electronic fund transfers and BPAY can take a number of days to appear in your super account.
Check your super caps before contributing
There are annual caps on how much you can contribute into your super account, so it’s essential to monitor the total amount of both your concessional (before-tax) and non-concessional (after-tax) contributions across all your super accounts before making a pre-30 June contribution.
Check whether any payments intended for the 2018/19 year slipped into this financial year to ensure you don’t breach your contribution caps.
*Remember: your concessional cap includes your employer’s 9.50% SG contributions, your salary sacrifice amounts plus any personal contributions for which you plan to claim a tax deduction.
Watch your total super balance
If you plan to make a non-concessional (after-tax) contribution into your super account before financial year-end, it’s essential to check what your Total Superannuation Balance (TSB) was on 30 June 2019.
If your TSB was $1.6 million or more on 30 June 2019, you are not eligible to make any non-concessional contributions during 2019/20 without triggering an excess contribution and paying additional tax on the contribution.
Consider making a personal tax-deductible contribution
If you have the available funds, now could be a good time to make a one-off contribution into your super account. Since 1 July 2017, eligible Australians are able to claim a tax deduction if they make a personal contribution into their super account up to the concessional contributions cap.
A personal super contribution can be worthwhile considering, as earnings on your super are taxed at a maximum rate of 15%, whereas earnings on personal investments outside the super system are taxed at your marginal income tax rate (up to 45%).
Consider using carry-forward concessional cap amounts
FY2019/20 financial year is the first financial year in which you are able to use any of an unused concessional contributions cap from a previous year, so it could be a good way to boost your super balance.
Individuals who did not use all their $25,000 concessional (before-tax) contributions cap in 2018/19 are permitted to carry-forward the unused amount on a rolling basis for five years, so think about making a concessional contribution before 30 June 2020.
Think about boosting your spouse’s super balance
If the balances of you and your partner’s super accounts are very different, consider submitting a request to split some of your super contribution with your spouse to even them up. Requests to split need to be made by 30 June of the financial year following the year the contributions were made, so you can split some of your 2018/19 super contributions if you lodge a request with your super fund by 30 June 2020.
If your spouse has a total income below $37,000, it’s also worth considering making a contribution into their super account to help boost their retirement savings – and possibly earn yourself a tax deduction.
Eligible contributions into your spouse’s super account of up to $3,000 may provide you with a tax offset on your tax bill of up to $540. If your spouse’s total income is up to $40,000, you can still qualify for the offset, but the amount will be less.
Get in touch
Should you wish to review the scope and suitability of additional contributions to your super before EOFY- please get in contact with our Adviser team below.