End Of Year Looms For Superannuation Tax Planning
With the end of the financial year looming, now is a good time to be thinking about your end of year superannuation strategies. It may also help you to avoid some common traps and tax penalties.
Reduced concessional contributions cap
From 1 July 2012, the concessional contribution cap for individuals over 50 was reduced from $50,000 to $25,000. Where you are making salary sacrifice or personal deductible contributions to super, you should review what contributions have been made from all sources. You may need to take action before the end of the financial year to make sure the cap is not exceeded so you won’t incur excess contributions tax.
For every dollar of non-concessional (after tax) superannuation contributions, the Government contributes 50 cents to your superannuation up to a maximum government co-contribution of $500.
The maximum government co-contribution is payable for individuals on incomes at or below $31,920 and reduces by 3.33 cents for each dollar above this. The payment will cut out completely once an individual’s total income for the year exceeds $46,920.
If possible, you should take advantage of the Government co-contribution to boost your retirement savings by making a non-concessional (after tax) super contribution before the end of the financial year.
Claiming a tax deduction for your personal superannuation contributions
If you are intending to claim a tax deduction for your superannuation contributions make sure you are eligible to claim the tax deduction and pro-actively seek advice if unsure. Also ensure you keep all relevant paperwork to save stress when it is time to claim a benefit or a deduction.
Beware of excess contributions tax
Investors who want to make large superannuation contributions should exercise extreme care regarding the amount and type of contribution they make to avoid excess contributions penalties. For example, any type of contribution made during the two preceding financial years may impact on the contributions that can be made this financial year.
How can we help?
If you need assistance with any aspect of your end of year superannuation tax planning, please feel free to give us a call to arrange a time to meet so that we can discuss your particular requirements in more detail.
Call Advice for Living on 03 8370 5307.