Smart Super Strategies for this EOFY
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 savings 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 below $60,400 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 below $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 |
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 generally 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’ pension4. Here, you won’t pay tax on investment earnings, and any pension payments you receive from age 60 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 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 use any of these strategies. A financial adviser can help assess your eligibility for these strategies, explain the different options available to you in detail and help you decide which strategies are appropriate for you.