As the end of the financial year (EOFY) deadline gets close, this is the time to consider if any superannuation and taxation opportunities are still on the table.
By taking advantage of available tax concessions, you can potentially reduce your tax liability and secure a stronger financial future.
Let’s have a look at some key considerations and strategies to help you navigate your EOFY planning.
Superannuation
Despite successive governments tweaking the super rules, it remains for most, a tax-effective investment vehicle and contributing to your super before 30 June can offer several advantages:
- Concessional Contributions: Concessional contributions include employer contributions, salary sacrifice contributions and personal contributions for which you claim a personal tax deduction. Individuals can contribute up to $27,500 per financial year and you may have room in this annual limit which could potentially save you tax. Anyone with a superannuation balance at 30 June 2022 of less than $500,000 may be eligible to carry forward unused concessional contributions to enable a larger tax deduction. Careful planning is required here.
- Non-Concessional Contributions: Non-concessional contributions are after-tax contributions made from your personal savings. While the annual limit is $110,000, individuals may be eligible to bring forward three years’ worth of contributions, allowing a maximum of up to $330,000. Making non-concessional contributions can boost your retirement savings and again may provide tax benefits. While the bring forward rules have been around for some time, the removal of a work test for those between age 67 and 74 opens up this strategy to more individuals.
- Government Co-Contribution: For lower-income earners, the government offers a co-contribution scheme to incentivise personal contributions to super. If you earn less than $57,016 in the financial year, contributing up to $1,000 of after-tax income to your super could make you eligible for a government co-contribution of up to $500. This can boost your retirement savings without a heavy financial burden.
- Spouse Contributions: If your spouse earns a low income or is not working, you may be eligible for a tax offset by making contributions to their superannuation account. By making after-tax contributions on behalf of your spouse, you could receive a tax offset of up to $540, subject to certain conditions. This can provide a valuable tax-saving opportunity for couples.
Beware of super fund deadlines
To ensure contributions are counted in the current financial year, contributions must be received by the super fund by 30 June. The date the transfer is completed from your employer or personal bank account is not relevant. Using an EFT, Bpay or the ATO’s super clearing house could result in a timing delay and result in the contribution being allocated to the 2024 financial year. Don’t leave contributions to the last moment!
Be careful with annual limits
There can be tax implications if you exceed your superannuation contribution limits. Pay close attention to contributions already made as well as any employer contributions still to be done before 30 June.
Non-superannuation strategies
Apart from superannuation strategies, pre-30 June tax planning involves maximising deductions and tax offsets. Consider the following options:
Prepay interest and other expenses – you may be able to prepay the interest on a personally held investment property or investment portfolio. You may also be able to pay your income protection policy in advance.
Investment property expenses – keep records of expenses such as repairs and maintenance, rates and water charges, insurances, agent and advertising fees. Potentially bring forward repairs prior to 30 June.
Make a donation – first make sure the charity is a deductible gift recipient.
Self education, travel and vehicle expenses – the ability to claim work related expenses is stringent so make sure you keep receipts so you can determine whether they are tax deductible.
Keep Wealth Partners Pty Ltd (AFSL 494858). This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial adviser who can consider if the strategies and products are right for you. While every effort has been made to ensure the accuracy of the information, we do no guarantee that the information is correct.
