Let’s get physical, and flexible, with superannuation’s new rules

OLIVIA Newton-John’s most popular song is stuck in my head, and it’s all because of Australia’s changing superannuation system.

CLOSE your eyes for a moment and think of the most famous Olivia Newton-John song you know.

If that song was Physical, you’d be right, and you have a long memory.

It spent a couple of months at number one on the charts back in 1981 and its music video featured Olivia massaging and dancing with muscular men, then with fat blokes, and then the fat blokes turned into muscular men. Classic stuff.

But now I have a problem. Every time I think about superannuation, that song pops into my head.

And the lyrics get changed slightly to “let’s get flexible, flexible; I want to get flexiblllee!”

I think it’s because super has some impressive new flexibility this year, and everyday Aussies are the winners.

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Super remains one of the most tax-effective places to hold your money, and can be completely tax-free at retirement, but getting your money in has been anything but flexible. That’s changing.

Olivia Newton-John song and video Physical was a global hit in the early 1980s.'

TAX DEDUCTIONS

Anyone wanting to pump extra cash into their super and claim a tax deduction can now do it at any time, as long as it fits within their annual $25,000 cap for concessional — which is super-speak for tax-deductible — contributions.

Before 2017-18, only self-employed people could make tax-deductible deposits at any time, and workers had to set up salary sacrifice in advance. Today, if you have some spare cash sitting around before June 30 you can beef-up your super balance.

PLAYING CATCH-UP

From July 1, most people who haven’t used their full $25,000 annual contribution cap will be allowed to make catch-up deposits using up to five years of unused previous contributions.

This is great for people who have taken a break from work, such as parents of newborns, who want to get their super savings back on track.

Super is the word ... Another Olivia Newton-John hit was Grease, with John Travolta

However, as with all super rules, there’s some fine print that delays the true benefit of this new flexibility feature. “Only unused amounts accrued from 1 July 2018 can be carried forward,” the rules say.

You can still pay up to $150,000 a year of after-tax contributions into your super, if you have that lying around the house.

SPOUSE SPECIAL TREATMENT

Fancy getting a free $540 from the government just for pumping $3000 into your lower-income spouse’s super account?

The rules around the spouse tax offset have become much more flexible. Previously spouses could only earn up to $10,800 a year, which ruled out all but the most part-time earners.

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However, since July 1 spouses have been able to earn up to $37,000 to get the full tax offset, and up to $40,000 to get a part offset.

Flexible and physical, super has become sexier for many everyday Aussies, and taking some time to learn the rules can deliver some handy savings and tax benefits.

I told a mate about my weird Physical earworm, and he suggested changing the words to “let’s get fiscal” to add some financial flavour. Sorry, but that doesn’t have enough syllables, syllables; I want to get syllables.

If Physical now pops into your head every time you think about superannuation, my work here is done.

@keanemoney