One subject that is often front of mind leading up to the end of the financial year, is making the most out of any opportunities to put money into superannuation. With June 30 only weeks away, it pays to think about these opportunities and the benefits that may exist. There are a number of advantages to contributing money into superannuation, one of the most attractive being the tax concessions.
Although often highlighted during your review meetings, and for many, you have already made contributions through existing strategies, we thought it was timely to reconnect as a reminder for the deadline.
Below we have highlighted some common contribution methods that may be of benefit to you and put some money back in your pocket come tax time.
Concessional Contributions (Personal Deductible Contribution)
With legislation changes in 2017, individuals are now eligible to claim a tax deduction for contributions they make to superannuation from their own money. This effectively reduces your taxable income which can reduce your tax liability.
The key benefit of these contributions is the tax concessions, with contributions attracting only a 15% tax rate. When comparing this with your current Marginal Tax Rate (MTR), this may provide a tax advantage to you. The higher your Marginal Tax Rate the greater the benefit.
There is a limit of $25,000 per year and any contributions made by an employer (including salary sacrifice) will also count towards this limit. This means it is important to check carefully how much will be contributed for you by your employer before deciding to make extra contributions yourself.
Non- Concessional Contributions
A non-concessional contribution is an after-tax contribution which is capped at $100,000 per year or $300,000 over 3 years, using the bring forward rule. It is worth noting, the bring forward rule is only available to members under 65 years of age.
This may be beneficial for individuals who have received an inheritance, redundancy or if lucky, won the lotto!
Depending on your situation, you may be entitled to a tax offset by contributing to your spouse’s superannuation account. The spouse offset is limited to 18% of the contribution up to a maximum rebate of $540. In order to receive the maximum rebate, a contribution of $3,000 would be made.
To be entitled to the spouse contribution tax offset:
· The receiving spouse’s income must be $37,000 or less (to receive the maximum offset) and less than $40,000 to receive a partial tax offset.
· The receiving spouse must be under age 65, or meet a work test between 65-69.
· You must make a contribution to your spouse’s superannuation account this financial year.
*It is important to note, these contributions must be made prior to 30 June 2019.
If you have any questions, please do not hesitate to call the office on 07 3281 1300, to speak with David, Ryan or Nat for further information.
General Advice Warning
Past performance is not an indicator of future performance. The information provided in this article is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we, therefore, recommend you seek advice tailored to your individual circumstances before making any specific decisions. Dobbrick Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. Innova Asset Management is a Corporate Authorised Representative of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357 306.