End of Financial Year Super Strategies
Updated: May 5
It's getting close to the end of the 2020-21 financial year, let's take a look at superannuation strategies to boost your super and save you tax.
1. Make a tax-deductible superannuation contribution
You may be able to claim a tax deduction on after-tax super contributions you’ve made, or make, before 30 June this year. This contribution will then be taxed in your superannuation fund, usually at the rate of 15%, instead of at your marginal tax rate which could be up to 47% (including Medicare Levy). Depending on your circumstances this may mean a tax saving of up to 32% and a boost your super balance.
This strategy is often useful to those who have received extra income throughout the year or those who have surplus savings in bank accounts that they would like to move to the superannuation environment and are under their superannuation cap.
How much can I contribute? Personal super contributions claimed as a tax deduction count towards your concessional contribution cap, which is $25,000 in the 2020/21 financial year. Employer contributions (superannuation guarantee and salary sacrifice) also count towards this cap, so you need to ensure you do not exceed this amount as penalties may apply.
However, you may be able to contribute more than this if you didn’t fully use up the $25,000 cap in 2018/19 or 2019/20 by making some additional ‘catch-up’ contributions.
People age under 67 are eligible to make a personal deductible contribution. If you are between 67 to 74 you need to meet a work test.
Get the Notice of Intent Process Right
To claim the super contribution as a tax deduction, you need to submit a valid ‘Notice of Intent’ form to your super fund, and receive an acknowledgement from them, before you lodge your tax return, start a pension or withdraw or rollover the money.
2. Personal Non-Concessional Superannuation Contributions
Making a personal non-concessional contribution by contributing after-tax income or savings. This will not reduce your taxable income, however you may still benefit from the concessionally taxed superannuation environment.
How much can I contribute?
The Non-Concessional Contribution Cap is $100,000 for the 2020/21 financial year. You may be able to contribute up to $300,000 by using the bring forward rule.
3. Government Co-contributions
This scheme does still exist! You are eligible If your total income is less than $54,837 and contribute before 30 June 2021 an after-tax contribution to your super fund (which you do not claim a tax deduction for).
For the 2020/21 Financial year, those with a total income equal to or less than $39,837 and who make an after-tax contributions of $1,000 to your super fund, you’ll receive the maximum co-contribution of $500. If your total income is between $39,837 and $54,837, your maximum entitlement will reduce progressively as your income rises.
This scheme is great for those who are working part time or winding back work and income due to upcoming retirement.
4. Spouse Contributions
Boost your spouse's super and claim a tax offset, it's a win for your spouse, a win for you and a win for your combined superannuation balance!
To receive the maximum tax offset of $540, you need to contribute a minimum of $3,000 and your spouse's annual income needs to be $37,000 or less.
Once your partner's income exceeds $37,000, you’re still eligible for a partial offset. Eligibility for the offset cuts off once the spouse's income is over $40,000.
This article is current as of 1 May 2021. Though we have taken care to prepare this article we take no liability for loss arising from reliance on information in this article . We are happy to provide personal financial advice either in person in our Newcastle office or via video conference please contact us.
Work Test 2020/21- Worked at least 40 hours over 30 consective days in the relevant financial year. Or if you met the work test in the previous financial year and your total super balance was less than $300,000 on the previous 30 June.