Your superannuation checklist: act now for big tax savings

June 30 is just a week away, which means the superannuation clock is ticking for those wanting big tax deduction and savings.

Super fund members are being urged to act fast to make the most of tax incentives and saving strategies that grow their nest egg faster.

Waiting until the last couple of days before June 30 to make your moves is dangerous, because some electronic transfers of cash can take a few days to reach your super fund.

QSuper’s chief of member experience, Jason Murray, says there are a few ways to get money into super and potentially boost your tax return “but don’t leave it to the last minute”.

“Check with your fund as some have earlier deadlines,” he says.

CHECK YOUR CAPS

“Before you make any extra contributions, check how much you have already contributed and how much is left within your annual limits,” Murray says.

Tax-deductible super contributions, known as concessional contributions, include employer payments, salary sacrifice and personal one-off payments and have an annual cap of $25,000.

There’s also a $100,000 annual cap for your non-concessional contributions – which don’t deliver tax deductions but can greatly swell your super.

KPMG tax partner Mardi Heinrich says consider super’s carry-forward rules.

CAN YOU PLAY CATCH-UP?

“If your total super balance is less than $500,000 on June 30 of the previous year, you may also be entitled to contribute more than your annual concessional contribution cap based on any unused concessional contribution cap amounts from previous years,” Murray says.

“Your carry forward concessional contribution cap can be found in the ATO online services section of myGov,” he says.

KPMG tax partner Mardi Heinrich says these carry-forward rules came into effect from July 2019

SENIORS’ TAX BREAKS

Salary sacrifice used to be the main way to get tax deductions for super contributions, but rule changes since 2017 allow all Australians under 75 to make a contribution and claim a deduction if they satisfy a generous work test.

“In order to claim a tax deduction for the contribution, taxpayers need to provide their super fund with a ‘notice of intent to claim or vary a deduction for personal super contributions’ on or before the day the 2021 tax return is lodged or 30 June 2022, whichever is earlier,” Heinrich says.

CO-CONTRIBUTION

Author and financial planner Patricia Howard says if you earn less than $52,697 a year and make an after-tax (non-concessional) contribution of up to $1000, you can receive a government co-contribution of up to $500.

“That’s a guaranteed return of 50 per cent,” she says.

“The best part about this scheme is that once you’ve made the contribution, you don’t need to do anything more. Just lodge your tax return for the year and the ATO will make the contribution automatically.”

HAS YOUR BOSS PAID UP?

Howard says most workers should have 9.5 per cent of their gross salary paid into their super by their employer through the compulsory superannuation guarantee system.

Author and financial planner Patricia Howard says spouses have extra super incentives.

Check your fund balance and transactions, and if it’s not paid speak with the Australian Taxation Office, she says.

“Too often employees don’t take this simple step of double checking their employer’s contributions and they can, over 10 or 20 years, end up losing a small fortune in underpayments,” Howard says.

“It’s a simple step and the ATO can help you by double checking what your employer is doing.”

SPOUSE-CONTRIBUTIONS SAVE TAX

“If your partner earns less than $40,000 and you make a super contribution on their behalf, you may be able to claim a tax offset of up to $540 on your tax return, which as an offset, will reduce your overall tax bill,” Howard says.

INSURANCE CHECK

BT head of financial literacy Bryan Ashenden says many people have life insurance inside super and it can deliver big benefits because premiums are paid from the fund balance rather than their pocket.

“But you need to make sure you have the right cover,” he says. “Consider if your circumstances have changed and how this might impact your protection levels.”

IS YOUR BALANCE BIG ENOUGH?

While super is on your mind, look at free superannuation and retirement calculators on moneysmart.gov.au to get a projection of how much your nest egg will grow by retirement.