Tax, What's New

Tax time tip #2: Getting your super sorted before June 30

Published on June 5, 2018 4:22 am, by

Ok, so we’ve covered some of the special super options available to low income earners in the 2017/18 tax year. But there are also other things you might want to consider getting organised before June 30, especially if you are looking to maximise your superannuation savings. Here are some of the key things to think about.

Make the most of your contribution caps

Getting money into super is a bit more difficult these days so it is important to be contributing to super consistently over the years. As you probably know, there are limits, called contribution caps, to the amount you can contribute to super each year. There is a contribution cap for contributions you make that are paid from money you haven’t paid tax on (called concessional contributions) and one for contributions you make with money you have paid tax on (called non-concessional contributions).

If you haven’t used your contribution caps and you have don’t have a better use for the money you might think about making additional contributions into super before June 30.

It’s also worth noting that from 1 July 2018 you will be able to ‘carry forward’ your non-concessional contribution caps if you have a super balance less than $500,000 and make use of caps you don’t use up in future years. This will help make sure people get the opportunity to use their caps.

What does it mean?

The concessional and non-concessional contribution caps for 2017/18 are $25,000 and $100,000 respectively. Have a look at how much of the caps you have used and if you are looking to maximise your retirement savings and don’t have a better use for the money put some extra money into super before June 30. Make sure you don’t exceed the contribution caps or you may have to pay excess contributions charges.

Additional information on contribution caps is available from the Australian Tax Office here.

Making personal super contributions

Prior to the 2017/2018 financial year most people could only claim a tax deduction for making a personal, after tax contribution if they earned less than 10% of their income in the form of salary and wages (in other words they were self employed). From the 1st July 2017 most people under age 75 can make a personal, after tax contribution and claim a tax deduction for it. For those between 65 and 75 you will need to satisfy what is known as the ‘work test’.

What does it mean?

If you are trying to increase your retirement savings and wouldn’t otherwise use your concessional contribution cap you might want to consider making a personal contribution and claiming a tax deduction for it.

Additional information on making personal super contributions is available from the Australian Tax Office here.

Using the First Home Super Saver Scheme

From the 1st July 2017 you have been able to make voluntary contributions into your super fund to help save for your first home. The idea behind the scheme is that the concessional tax treatment of superannuation could help first home buys save more quickly.

From the 1st July 2018 eligible superannuation members will be able to have some of their super savings released to help fund the purchase of their first home.

What does it mean?

If you are saving for your first home you might want to consider saving inside super. From 1 July 2018 you can apply to the ATO to have up to $15,000 from any one year and $30,000 from eligible super contributions and earnings released using the First Home Super Saver Scheme release form.

Additional information on the First Home Super Saver Scheme is available from the Australian Tax Office here.

Contributing “downsizing” sale proceeds into super

If you are 65 years old, or older and sell a property on or after 1 July 2018 you may be able to contribute up to $300,000 from the proceeds of selling your main residence into your super fund. Your spouse may also be able to make a $300,000 contribution.

What does it mean?

If you have owned you main residence for 10 years or more and you are looking to downsize you might want to consider postponing the sale until 1 July 2018 or later to take advantage of the downsizing contribution rules. If you are eligible to make a downsizer contribution you will need to complete the downsizer contribution form which should be available from the ATO or your fund prior to 1 July 2018.

Additional information on the Downsizing Contributions is available from the Australian Tax Office here.

This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) or the Australian Taxation Office.

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Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.

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