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Tips to boost your super before the end of the financial year


Tips to boost your super before the end of the financial year

The end of the 2017/18 financial year is approaching fast, so now might be a good time to make the most out of your super before 30 June.

Making additional contributions could help give your super balance a boost, and there are potential tax benefits as well.

It’s important to review your super before 30 June 2018 because new thresholds and other guidelines kicked in on 1 July 2017. The good news is that even with less than a month to go before 30 June there is still time to make a difference to your super.

Here are five tips and benefits to consider.

1. Reduce your taxable income with salary sacrifice

Making salary sacrifice contributions (called concessional contributions) can be a great way to boost your retirement savings and may even reduce the amount of tax you pay. Salary sacrifice contributions are made from your pay before income tax is deducted.

How do you do this? Speak to your employer about making before-tax contributions from your salary. They need to make your contribution soon so that it’s added to your super account before 30 June.

What are the benefits? Thanks to the power of compound interest, if you pay small, regular amounts of extra money into your super now, you'll have a lot more money when you retire.

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Check out the super contributions optimiser calculator (developed by MoneySmart) to help you work out which type of super contribution will give your super the biggest boost.

Is there a limit? There is a cap per financial year (currently $25,000) on the amount of concessional (before-tax) contributions that you can make. This includes salary sacrifice and compulsory and additional employer contributions, as well as personal contributions which you can claim as a tax deduction in your tax return.

2. Let the Government help you contribute to your super!

Making voluntary after-tax super contributions (called non-concessional contributions) may also be a good option for you if you are a low income earner or you have reached your concessional cap limit.

How does the Government help? If you earn less than $51,813 per year (before tax) and make after-tax super contributions, you’re eligible for Government co-contributions. The amount of the co-contribution you’re eligible for reduces as your earnings increase, but if you earn less than $36,813 the maximum co-contribution is $500 (based on 50c from the Government for every $1 you contribute). That’s a pretty good return for your money!

Check out the Government co-contribution calculator (developed by MoneySmart) to help you work out if you are eligible for a co-contribution and how much you could get.

How do you do this? You can make an after-tax contribution with BPAY from your bank account. To find your BPAY payment details, please log into your WA Super online member account and select ‘Contribute to your Super’ in the QuickLink menu. BPAY contributions need to be made by Tuesday, 26 June 2018 for it to be allocated to your super account this financial year.

What are the benefits? If you make personal after-tax super contributions you can claim them as a tax deduction. See the next tip for more details about getting tax back.

Is there a limit? There’s a cap per financial year, currently $100,000, on the amount of after-tax contributions you can make. If you’re under age 65, and your total super balance is less than $1.5 million at the end of 30 June 2017, you can also ‘bring forward’ up to 3 years’ worth of after-tax contributions, which means you could contribute up to $300,000 in a financial year. For full details on how this ‘bring-forward’ arrangement works, go to the ATO website at www.ato.gov.au.

3. You might be able to claim a tax deduction

If you are unlikely to reach your concessional cap limit this year, then it’s still not too late to “top” your super up. Claiming a tax deduction on your extra super contributions means you’ll pay less tax on your income.

What are the benefits? Earnings on your super are taxed at a maximum of 15%, whereas earnings on personal investments outside of super are taxed at your personal (marginal) income tax rate (up to 45% + Medicare levy). If you do this now, you can take advantage of the new rules from 1 July 2017, which allow most people to make personal contributions and get a tax deduction by putting money directly into their super account before 30 June each year.

Can anyone claim a tax deduction? Most people under age 75 can claim a tax deduction on personal super contributions, but conditions may apply. If you’re eligible, and are planning to claim a tax deduction, you’ll need to send a Notice of Intent to claim form to us within strict timeframes, and also receive written acknowledgement from us that we have received it. Please contact us to find out more about claiming a tax deduction on super contributions.

4. Spouse Contributions

If you are employed and your eligible spouse (married or de-facto) is either not working or earning less than $40,000 per year, you can contribute to their super and get up to a $540 tax rebate a year.

How do you do this? Firstly check to see if you are eligible here.

Next, you need to make a contribution by EFT or by cheque to WA Super. Please note you cannot do BPAY. If you need our bank details, please contact us. Then simply complete and email us back our personal contribution advice form.

5. Don’t leave your contributions until the last minute

Contributions to super funds count for the year that they are received, not the date you make the payment. For example, if you make the payment on 28 or 29 June 2018 (30 June is a Saturday this year), we won’t receive it until 3 July 2018 at the earliest. That means it will be counted towards your contributions for the next financial year (2018/19), instead of this financial year.

What are the benefits? Each financial year, contribution caps reset, and rules can change. Getting your extra contributions sorted out now can remove any unnecessary complexity and paperwork.

How do you do this? We offer BPAY payments, which are the quickest and easiest to make. You should pay contributions by Tuesday, 26 June 2018 at the latest to ensure your super contribution is allocated to your account in time. Different timeframes also apply to your employer’s contributions, including salary sacrifice.

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