Q: With 30 June fast approaching, are there any last minute opportunities for tax benefits by contributing to Super? I am 66 and earn $36,000 from part-time work.
A: As of Saturday, there are only 2 working days until the end of Financial Year. The following is a couple of last minute opportunities you may like to consider prior to the 30 June deadline.
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 of $25,000 for the 2019-2020 financial year on the amount of Concessional Superannuation contributions you can make. This cap includes salary sacrifice and compulsory employer contributions, as well as any personal contributions which you claim as a tax deduction in your tax return.
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.
It is important to 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 are under the cap, you could top up your Super and claim a tax deduction for those contributions up to the Concessional Contribution Cap.
The cap for after-tax contribution to Super for the 2019-20 financial year is $100,000. However, if your total superannuation balance at 30 June of the previous year was $1.6 million or more, your will be unable to make non-concessional superannuation contributions.
When you make an after-tax super contribution and you earn less than $53,564 per year before tax, you are eligible for the Government Superannuation co-contribution. If you earn less than $38,564, 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 above this.
In order to benefit from the maximum Government Co-contribution, you will need to make a $1,000 non-concessional superannuation contribution before 30 June and ensure that you lodge your tax return for the 2019-20 year in due course. Further, at least 10% of your income must be income that has been derived from employment or from carrying on a business (or a combination of both).
You will need to be quick to take advantage of these opportunities for this financial year, contributions must be received by your fund on or before 30 June.