Many Australians could be missing out on a super windfall because they are not making the most of their retirement funds at the end of the financial year.
There are four simple steps you can take to boost your super as June 30 approaches.
One tip is to salary sacrifice, which can not only increase your super but decrease your tax. This is a strategy that all Australians should take advantage of. It is as simple as asking your employer to contribute a part of your salary directly into your super.
Australian women are being encouraged to take advantage of their super at tax time. Women on average have less super than men. Through salary sacrificing or spousal contributions women can make sure they keep topping up their super where possible.
Low-income earners also need not miss out putting more money into their super, as the government will pay a bonus to people who contribute with after-tax money.
Tax time may also be a good opportunity for Australians to look more closely at their super and where their money is being invested. While you’re looking at how to make the most of your super at tax time, why not also look more closely to see where your money is being invested? You may find that your investments aren’t aligning with your values, such as being coal-free or tobacco-free.
If this is the case, then tax time is the perfect time to switch to a super fund that aligns with and supports your values.
Top four tax time super tips
1. Salary sacrifice: You can reduce your taxable income and boost your retirement savings by asking your employer to salary sacrifice some of your pre-tax salary to your super account. Super contributions are taxed at a concessional rate of 15%, which for most people is lower than their marginal tax rate.
2. Government co-contribution: By making personal contributions to your account you may be entitled to a super co-contribution from the government. If your taxable income is below the low income threshold, the government will contribute 50 cents for every $1 you contribute up to $500 per year. The full co-contribution is reduced for each dollar of taxable income above the low income threshold, up to the higher income threshold, at which point no co-contribution is paid. Check the ATO website for details.
3. Spouse contributions: If your spouse earns less than $40,000 you could receive a tax rebate of up to $540 by contributing $3,000 of after-tax money to their superannuation account on their behalf. This tax offset reduces as your spouse’s income exceeds $37,000 and cuts off completely when their income reaches $40,000 or more.
4. Watch your limits: The government has placed a limit of $25,000 in pre-tax (employer or salary sacrificed) contributions and $100,000 in post-tax contributions that you can make into superannuation before they impose additional taxes. Under new rules from 1 July 2019 you may be entitled to use some of your ‘unused’ contributions from previous years. You can read more information about the rules regarding concessional and non-concessional contribution caps at the ATO website.