It’s the end of May, which means there’s only a month to go to the end of this financial year. Each financial year presents opportunities to save money by making the most of the tax and super legislation available to you. With only a month to go, now is the time to act. Here are my top tips to save you money and boost your super this financial year and what to watch if you’re in pension phase.
If you have surplus income and some savings sitting the bank account that you won’t need, consider making a personal contribution to your super fund. You can claim a tax deduction for a contribution of up to $25,000, which can mean a significant tax saving if you’re on a middle to high taxable income, or you have incurred some capital gains this financial year. Bear in mind that $25,000 maximum does include employer contributions and any salary sacrifice contributions.
If you’re nearing retirement and you have significant assets outside of super, you could consider putting up to $100,000 into super as a non-concessional contribution, to really boost your super and get it growing in a tax effective investment. In some cases, you may even be able to bring forward 3 years’ worth, or up to $300,000, and put this into super before 30 June.
If your taxable income is less than around $37,000 this financial year, you are likely eligible to receive a contribution of $500 from the ATO, if you make a $1,000 non-deductible contribution to super before 30 June. This is called the government co-contribution, and it will automatically be paid into your super fund after you’ve lodged your tax return.
If your spouse earns less than $37,000 this financial year, then you may consider a spouse contribution to super of up to $3000 before 30 June. This may entitle you to a tax offset of $540 on your tax return.
Minimum Pension Payments
Lastly a word of caution for those already drawing a pension from their super fund, June is the time to check that you’ve drawn the minimum required amount for the year, particularly if you have your own Self-Managed Super fund. If you don’t draw at least the minimum required pension, you will lose your tax exemption of your pension income.
As with all superannuation legislation, there are eligibility conditions and exceptions to the rules, which means it can get complex. So please do get professional financial advice if you are looking to take advantage these EOFY opportunities.