Maximise super and tax benefits before 30 June
With the end of the financial year approaching, now is the time to make the most of opportunities to maximise super and tax benefits by 30 June 2010.
There are a range of strategies that could help you save more money in super, and put you on the right track to achieving your personal goals, no matter what life stage you’re at.
CCA can guide you through how these strategies could help you make the most of your money, and have summarised a few that could work for you below.
Did you know you could be eligible to receive a Government co-contribution into your super? For example, if you make a personal after-tax contribution of $1,000 into your super, the Government could pay an additional $1,000 into your account. That’s a potential return of up to 100% on the amount you invest.
Spouse super contributions
If you make an after-tax contribution of up to $3,000 to your spouse’s super fund, you could be eligible to claim a tax offset of up to $540. This offset will reduce you tax this financial year and you could use the money to make additional super contributions for your spouse (or yourself) next financial year.
Super contribution splitting
Did you know you could be eligible to split certain super contributions into your spouse’s super account? This strategy could mean you receive your combined super more tax-effectively before age 60.
Also, if you have an older spouse, they’ll be able to receive the money tax-free earlier than you, when they reach age 60. For example, if you’re 50, your spouse is 55 and you transfer super contributions into their account, they can take the money as a tax-free pension or lump sum five years earlier than you.
Did you know if you prepay the interest on your investment loan for the next 12 months before 30 June, you may be able to claim a tax deduction for that interest in this year’s income tax return?
For example, if you prepay interest on a $100,000 investment loan and the interest rate is 7% p.a., you could save $2,765 in tax (if your marginal rate is 39.5%). This strategy could mean a significant reduction in your tax for this financial year. We can also discuss ways to make this payment while minimising the impact to your cash flow.
Personal deductible super contributions
If you’re self employed or under age 65 and recently retired, and you make personal super contributions before 30 June, you may be able to claim these as a tax deduction. This strategy could significantly increase your super and reduce your tax.
For example, if you’re over 50, you can claim a tax deduction for up to $50,000 without incurring a penalty, but only for this year and the following two financial years. After that, the cap drops to $25,000 p.a. So make the most of this super savings now while you can!
Want to reduce your overall tax burden? Salary sacrificing could help. Salary sacrificing involves contributing part of your pre-tax salary into super.
The beauty of this strategy is that contributions are taxed at a maximum rate of 15%, not your marginal rate of up to 46.5%.
If you’re over 50, you can receive contributions from your employer (including salary sacrifice) of up to $50,000 without incurring a penalty, but only for this and the following two financial years. After that, the cap drops to $25,000 p.a. So make the most of this super saving now while you can!
If you’re employed or self-employed and you’ve reached your preservation age, you could be eligible to access your super using a pre-retirement pension, also known as a “Transition to Retirement Pension (TTR)”.
For example, if you’re 55, you can use preserved or restricted super benefits to start a TTR. And at the same time you make salary sacrifice or personal deductible super contributions into super.
By using this strategy, you could boost your retirement savings, pay less tax and maintain your after-tax income while you’re still working!
Which strategies will work best for you?
It’s a great time to get together with your adviser at CCA Financial Planners to see which of the strategies above can help you maximise your super and tax benefits before 30 June. CCA Financial Planners are available now to discuss these strategies and their eligibility criteria in more detail and answer any questions you may have.
If you have any questions please call CCA Financial Planners on 1300 668 525, between 8.30am and 6pm, Monday to Friday.