The Weekly Advertiser

TAX TIME: Boost your super before June 30

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The end of the financial year is rapidly approaching and, along with it, the opportunity to claim a tax deduction on additional superannuation contributions. Superannuation does impose restrictions on access to your money. It is, after all, intended to provide for your retirement. So why would you lock up more of your money? Because superannuation remains one of the most tax-favoured environments within which to build wealth.
Financial adviser ROBERT GOUDIE explains.

Concessional contributions
Concessional contributions are super contributions that have been claimed as a tax deduction by someone. They include employer contributions – both super guarantee and salary sacrifice – as well as personal contributions on which you might be eligible to claim a tax deduction.
How much can I contribute?
For the 2017-18 financial year the limit on concessional contributions from all sources is $25,000. For example, if your annual salary is $150,000 and you only receive super guarantee contributions, your employer will contribute $14,250 – 9.5 percent of your salary – to your fund. That means you can make personal contributions of up to $10,750, and if you meet the eligibility terms, claim a tax deduction.
Entering into a salary sacrifice arrangement with your employer would achieve the same result. Based on the above salary, the maximum amount you could salary sacrifice is also $10,750, but you might not have enough time to do that this financial year.
When is the deadline?
Your contributions must be received and credited by your super fund by June 30.
To play it safe, make your personal contribution at least two weeks before the end of financial year. You must also notify your superannuation fund that you intend to claim a tax deduction for a personal contribution.
Your fund might send you the appropriate form to complete or you can use form NAT 71121 available online at to provide written notification to your fund. Your super fund must acknowledge receipt of this notice to make it a valid claim.
I’m approaching the cap
If you’ve maxed out your cap for this year and your spouse’s income is under $40,000, you might pick up a tax offset of up to $540 by making a spouse contribution to their fund.
Need help?
Your financial adviser can help you work out how to make the most of your concessional contribution cap and explain the finer details. And if you miss this year’s deadline, talk to your adviser about putting in place a plan to ensure you take advantage of next year’s concessional contribution opportunity.
The Superannuation Co-contribution Scheme started in 2003-04 to encourage us to make personal contributions to superannuation. It was targeted at low to middle income earners and has been improved progressively since then.
In 2016-17, more than 450,000 Australians claimed almost $143-million in co-contributions. A lot of people are taking advantage of this opportunity.
The thresholds
In the 2017-18 year, if you earn an income of $36,813 you can qualify for the maximum co-contribution. Income equals assessable income plus reportable fringe benefits. The co-contribution reduces by 3.333c in the dollar for each dollar of income higher than $36,813 and cuts out when your income reaches $51,813.
To be eligible to receive the co-contribution you need to have a total superannuation balance of less than $1.6-million and have not exceeded your non-concessional contributions cap for that financial year.
If you are self-employed
The co-contribution is also available to self-employed Australians who earn at least 10 percent of their total income from employment or running a business.
Income equals assessable income plus reportable fringe benefits less business income deductions. You must make a personal contribution without claiming a tax deduction for it. The tax office will work out the co-contribution amount from information on your tax return and details of contributions provided by your super fund.
A gift that will last
Here’s a chance to give your children a unique gift. As soon as they start work they could qualify for the co-contribution.
But with retirement a long way off and other priorities – like having a good time – they are unlikely to want to part with $1000 to pay into superannuation.
But what if you contributed it for them?
Assuming your child is 20 years old and earns less than $36,813, the government would match your contribution with $500.
If you repeated this gift for five years and his super earned 7.5 percent he would have an extra $8700 in savings.
The power of compound interest means that by the time he reaches age 60, he would have an extra $109,000 in superannuation. If you have not already taken advantage of this generous option, contact your licensed financial planner to learn how you might benefit from the super co-contribution scheme – for yourself or your loved ones.

The entire June 20, 2018 edition of The Weekly Advertiser is available online. READ IT HERE!

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Posted on Jun 20 2018

Posted by on Jun 20 2018. Filed under Finance, Finance advice. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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