With June 30 drawing nearer, businesses and individuals alike tend to look to strategic purchases and spending. But it’s also worth looking at your superannuation as there are potentially a number of super related tax benefits to be had. Check out the ‘to do’ list I’ve put together below:
1. Make sure your employer has made contributions on your behalf
Most employers will do the right thing when it comes to making the right contributions to your super fund but if you’re an employee, it’s always worth checking to make sure! Superannuation contributions should be clearly shown on your pay-slip and should reflect the amount that you have agreed with your employer. The Australian Taxation office can assist with chasing employers for contributions if needed.
2. Make your own contributions if you are self-employed
If you’re your own boss, it’s important to make your own superannuation contributions so that you’re working towards a secure financial future. An added bonus is that self-contributions can mean a significant tax benefit, whereby you can use contributions to reduce your taxable income. This option is usually popular among business owners who have had a good year, as well as retired or semi-retired people.
3. Check the cap on your super contributions
It’s important to keep in mind that tax deductible contributions are limited by law. The cap for people aged under 49 is currently sitting at $30,000 and $35,000 for those 49 and over. Contributions that your employer makes on your behalf also count towards this number.
4. Get free money from the government
If you earn less that $49,488, the government will give you $500 if you make a $1000 after tax contribution to your super, with the amount getting paid directly in to your super fund. If you’re new to the workforce, making your own contribution and taking advantage of this perk is a good habit to get in to early. While it might seem early to start worrying about your retirement, try and think of it as getting given a free $500 for putting $1000 in your savings account – you wouldn’t say no to that would you? Remember, the more money your put in to your super now, the better your retirement will be.
5. If your spouse earns less than $13,800 per year you can get a $540 tax offset by paying $3000 in to their super fund
If your spouse has sacrificed their career to look after home/kid duties, it’s important to remember that this also means they have sacrificed their super. It’s not uncommon for couples to come to an arrangement whereby the working spouse pays contributions in to the non-working spouse’s super fund. An added benefit to operating like this the $540 tax offset you are eligible for if you pay $3000 into the spouse’s super fund!
6. Look in to doing a last minute salary sacrifice – perhaps your last two weeks salary?
It’s a good idea to salary sacrifice year-round, however if you’re looking to reduce your taxable income, you may be able to salary sacrifice this late in the game if you have a willing employer so it may be worth asking the question. Perhaps you could salary sacrifice the last two weeks worth of salary for the financial year in to your super? Salary sacrificed contributions attract a tax rate of 15% which is often lower than your marginal tax rate.