Q. With next week being the last week before the end of Financial Year, are there any last minute Superannuation opportunities that I should be considering?
A. As of Saturday, there are only 5 working days until the end of Financial Year. The following is a brief overview of opportunities you may like to consider prior to 30 June.
To be eligible to contribute to Superannuation you need to be either under age 65 or satisfy the work test of 40 hours in a 30 day period in the tax year prior to making a contribution if older than 65 up to age 75.
In terms of making deductible contributions to Superannuation, there is a cap per financial year of $25,000 for the 2017-2018 Financial year on the amount of Concessional Superannuation contributions you can make. This includes salary sacrifice and compulsory employer contributions, as well as any personal contributions which you may claim as a tax deduction in your tax return.
From 1 July 2017, you may be able to claim a personal tax deduction for personal contributions you make to your super. This includes people who get their income from salary and wages, self-employment, investments, government pensions or allowances, Retirement Income Streams, partnership or trust distributions or foreign sourced income. Please check what contributions have been made into your Superannuation fund in the Financial year to date to ensure you don’t breach the contribution cap. If you meet the eligibility criteria and are under the cap, top up your Super to the Concessional Contribution Cap.
The cap for after-tax contribution to Super for the 2017- 2018 financial year is $100,000. If you’re under age 65, you can also ‘bring forward’ up to 3 years’ worth of after-tax contributions, which means you could contribute up to $300,000 in a financial year. However, if your total superannuation balance at 30 June of the previous year was $1.6 million or more, your after-tax contribution limit will be reduced to zero
When you make an after-tax super contribution and you earn less than $51,813 per year before tax, you are eligible for the Government Superannuation co-contribution. If you earn less than $36,813 the maximum co-contribution is $500 based on 50c from the government for every $1 you contribute. The amount of the Government co-contribution reduces as your earnings increase.
If your spouse earns less than $37,000 and you make a non-deductible contribution of up to $3,000, you may claim a Spouse Contributions tax offset of 18% up to $540. The tax offset amount will gradually reduce for income above this amount and completely phases out when your spouse’s income reaches $40,000. You will not be entitled to the tax offset when your spouse receiving the contribution exceeds their non-concessional contributions cap for the relevant year, or has a total superannuation balance equal to or exceeding the general transfer balance cap of $1.6 million.
Q. Before the 30 June are there any tax planning opportunities I should look at?
A. For individuals who have Income Protection, pay your yearly premium in advance prior to 30 June. If you don’t have Income Protection and would need ongoing income in the event of Disability, strongly consider arranging ASAP as it is tax deductible.
If you have investment assets that you are looking to sell with Capital gains, consider deferring the sale of investment assets until after 1 July to carry forward capital gains tax to the next year. Alternatively, offset gains made this year by realizing capital losses before 30 June.
Consider borrowing to invest through gearing. Borrowing to invest can enhance your portfolio growth and provide tax benefits with interest costs being tax deductible.
Make sure you claim all your eligible deductions, for example, charitable donations.
For those who are self-employed, don’t forget the $20,000 instant asset write down. Prepay Loans, leases and deductible expenses up to 12 months prior to 30 June to claim the Tax deduction in this Financial year.
Please check with your tax adviser before embarking on any tax planning.