Consolidating Your Super
If you’ve had several jobs since you started working, you may have money in more than one super fund. Having more than one super fund means you could be paying unnecessary fees and insurance premiums on each one. Combining all your super funds into one can make your super easier to track, simpler to manage and ensure you save on fees and charges.
Salary Sacrifice
Currently, most employees receive super guarantee (SG) contributions from their employer of at least 9.5% of their salary. Adding to these contributions directly from your gross (pre-tax) salary can be an easy and tax-effective way to top up your super. This is called salary sacrificing.
Personal Tax-Deductible Contributions
You can generally claim a full tax deduction for personal contributions that you make to super. While still subject to the concessional contributions cap, this strategy may prove timely if you have made a considerable capital gain from the sale of property or shares – as your deductible contribution to your super fund may help in offsetting your assessable capital gain. Not only could it reduce your marginal tax rate, it may also boost your super balance for retirement.
Take Advantage Of The Government Co-Contribution
To encourage you to save for your retirement, if your total income is below a certain threshold and you make a $1,000 after-tax contribution to super, the Government will generally contribute $500 to your super.
Split Super Contributions With Your Spouse
If you have a spouse, you are permitted to transfer certain super contributions from the previous financial year over to the super account of your partner. If the receiving spouse is over preservation age at the time of the split request, he or she must declare that they are not retired. Splits cannot be done once the receiving spouse turns 65. You can do this every year, generally once the financial year has ended. Up to 85% of taxable (concessional) contributions such as SG, salary sacrifice and personal tax-deductible contributions made to super can be transferred.
Consider the Benefits of Spouse Contribution Tax Offsets
Another potential tax concession is a spouse contribution tax offset. This strategy may be available if you make after-tax contributions directly to your spouse’s super account – these are known as eligible spouse contributions. To take advantage of this strategy, your spouse will need to be under age 65 or aged 65 to 69 and have satisfied a work test during the financial year. You can open a super account in your spouse’s name and make contributions to that account from your after-tax pay. You can also make these contributions to your spouse’s existing super account. You may potentially receive a tax offset of up to $540 from a spouse contribution depending on your situation.
Be Mindful About Contributions Caps
When considering any super strategy, it’s important to assess how much you are contributing to super in any one year. The Government has set annual limits known as contributions caps, and additional tax may apply where you exceed the caps.
Be Mindful of Contribution Eligibility
In order to make voluntary super contributions, at the time of the contribution, you must be either under the age of 65, or aged 65-74 and have been employed for gain or reward for 40 hours in a 30 consecutive day period during the financial year (this includes up to 28 days after the end of the month in which you turn 75). Spouse contributions cannot be made where the receiving spouse is aged 70 or over, and voluntary contributions generally cannot be made once you have reached the age of 75. Compulsory contributions (e.g. Super Guarantee) can be made at any time regardless of your age.
