End of financial year tips to help you save on tax
With only a small window remaining until the end of the financial year, focusing on tax and super-saving opportunities now is critical. Working effectively with the super rules can offer ways of saving tax and boosting super. Below, we explore just one way you could achieve this.
The option is by making a special type of super contribution that is tax-deductible – i.e. a ‘concessional’ contribution. For example, if you earned income of $90,000 over the full financial year, you could save almost $5,000 in personal tax for 2018/19 if you made the maximum concessional contribution of $25,000 before the end of this financial year. Even if you can only afford to make a modest contribution to super, you may still be able to receive a tax benefit. Check with your adviser to understand what amount will work well for you.
The good news? There is still time to do this before 30 June 2019.
While in previous years it was much harder to make these types of contributions, the government has recently made the process a little easier. In the past, most people had to make these contributions as a salary sacrifice through the year with their employer, but now you can make these contributions at any time during the financial year.
As there are annual limits on how much you can put into super, you do need to check how much room you still have left under the $25,000 concessional contributions cap for this financial year, being aware that employer superannuation guarantee contributions also form part of that maximum contribution level.
You will also need to fill out a Notice of Intent to Claim a Deduction for Personal Super Contributions form (accessible through your super fund or on the ATO website) and give that to your super fund and personal accountant before you submit your personal tax return. This is important to remember because if you miss this step, you won’t receive the tax benefit.
One final note to consider is that as your super is locked away until retirement, you should always check your cash flow and debt levels before contributing more. And if you’re unsure at any time, reach out to a professional for advice that is tailored to your individual circumstances.
This information is provided by Dixon Advisory & Superannuation Services Limited (ABN 54 103 071 665, AFSL 231 143) and may contain general financial advice. It was prepared without taking into account your objectives, financial situation or needs. Before acting on any advice, you should consider whether the advice is appropriate to you. Seeking professional personal advice is always highly recommended.
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Want to learn more about super?
Whether you’ve had the same super fund or investment structure in place for some time, your personal circumstances and balance may have changed – which is why it makes sense to review your arrangements. But where do you start? By using our simple guide, we show you five key areas you should consider when comparing options, which can help make it easier to make a more informed choice about your super and determine the most appropriate solution for you.