With June 30 fast approaching, it’s time to start thinking about your super for another year. We’ve put together five smart strategies that may benefit you now, and help boost your super.
| Strategy | This may be right if you … | How to use this strategy | The benefits may include |
| 1. Add to your super and get a tax deduction | Are employed, self-employed, or earn taxable income (including realised capital gains) from other sources eg shares | Make an after-tax super contribution and notify the fund how much you will claim as a tax deduction | • Pay less tax on your income • Increase your retirement savings |
| 2. Get more from your salary or bonus via salary sacrifice to super | Are an employee | Arrange for your employer to contribute some of your pre-tax salary or a bonus into super, as part of a salary sacrifice agreement | • Pay less tax on your salary or bonus • Increase your retirement savings |
| 3. Convert your non-super savings into super savings | Have money outside your super¹ that you’d like to invest for retirement | Make an after-tax super contribution | • Pay less tax on investment earnings • Increase your retirement savings |
| 4. Get a super top-up from the Government | Are employed or self-employed and have income² less than $57,016 pa | Make an after-tax super contribution | • Receive a Government co-contribution of up to $500 • Increase your retirement savings |
| 5. Boost your spouse’s super and reduce your tax | Have a spouse whose income² is less than $40,000 pa | Make an after-tax spouse contribution into your spouse’s super account | • Receive a tax offset of up to $540 • Increase your spouse’s retirement savings |
To use any of these strategies you’ll need to meet certain conditions. A financial adviser can assess your eligibility and help you decide which strategies are appropriate for you.
The tax advantages of saving in super
Saving more in super can come with tax and other benefits this financial year – but that’s just the start.
Once money is invested in super, earnings are taxed at a maximum rate of 15% – instead of your marginal tax rate, which may be up to 47%³.
This low tax rate may help you build up savings for your retirement.
When you do retire, you can also transfer your super into a ‘retirement phase’ pension*. Here, you won’t pay tax on investment earnings, and any pension payments you receive from age 60 onwards are tax-free.
Tips and traps
Before you add to your super, keep in mind you won’t be able to access the money until you meet certain conditions.
There are caps on how much you can contribute to super each year. It’s important to take the caps into account, as penalties may apply if you exceed them.
Make sure any contributions you want to make this financial year are received by your fund before June 30. With electronic transfers, the contribution takes effect the day your super fund receives the money, not the day you make the transfer.
Other eligibility criteria and conditions (including timing requirements) may apply in relation to these strategies. Further information can be found on the Australian Taxation Office website ato.gov.au.
Getting advice
You’ll need to meet certain conditions before you can benefit from any of these strategies. A financial adviser can help assess your eligibility for using these strategies, explain the different options available to you in detail, and help you decide which strategies are appropriate for you.
¹ CGT may apply on disposal of certain non-super investments/assets.
² Includes assessable income, reportable fringe benefits, and reportable employer super contributions reduced (but not below zero) by any excess concessional contributions and first home super saver assessable released amounts.
For the Government co-contribution, it is also reduced for allowable business deductions. Other eligibility conditions apply.
³ Includes Medicare levy.
* There is a limit on the total amount that can be transferred to the retirement phase in your lifetime. Generally, if you have never taken a retirement phase income stream, this limit is $1.7 million in FY 2022/23 (subject to indexation).
For any Financial Services assistance, please speak to a Financial Planner now at BW Private Wealth Financial Planning | Ballarat | Ararat | Surrounds
Important information and disclaimer
This document has been prepared by Actuate Alliance Services Pty (ABN 40 083 233 925, AFSL 240959) (Actuate), a related entity of Insignia Financial Ltd ABN 49 100 103 722. The information in this document is factual in nature. It reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue (27 March 2023), and may be subject to change. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment recommendation. To the extent that the information in the document contains general advice, it has been prepared without considering any person’s individual objectives, financial situation or needs. You should consider the appropriateness of the general advice in light of your own objectives, financial situation or needs.
This document is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Actuate. Whilst care has been taken in preparing the content, no liability is accepted by Actuate or any member of the Insignia Financial group, nor their agents or employees for any errors or omissions in this document, and/or losses or liabilities arising from any reliance on this document.
