Market Update: Preparing for End of Financial Year 2009/2010
02/06/2010There are a number of strategies that are available to help you make the most of your superannuation and tax positions this financial year-end.
We have outlined below some great ways to make the most of your super, what criteria you need to meet in order to qualify for this opportunity and what you need to do to take advantage of the opportunity.
Maximise your Super and Tax benefits before 30 June 2010
Please note that to take advantage of these options this year, we would need to review your circumstances and implement the appropriate strategies prior to June 30 2010.
If you would like to arrange a time to meet with one of our advisers please contact our office on (03) 8841 3111.
1. Top Up Your Super with the Help of the Government
Applies to those who earn less than $61,9202 from employment and have not yet made a personal contribution this financial year. If you earn less than $31,920pa a $1,000 personal contribution will attract a $1,000 government co-contribution.
The amount of government co-contribution gradually reduces to zero when income reaches $61,9202. If eligible, the amount you receive depends on the personal contribution made and your income, as shown below:
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If you make a personal contribution of:
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$1,000
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$500
|
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And your income1 is:
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Your super co-contribution will be:
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|
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$31,9202 or less
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$1,000
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$500
|
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$34,000
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$931
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$500
|
|
$38,000
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$797
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$500
|
|
$42,000
|
$664
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$500
|
|
$46,000
|
$531
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$500
|
|
$50,000
|
$397
|
$397
|
|
$54,000
|
$264
|
$264
|
|
$58,000
|
$131
|
$131
|
|
$61,9202 and over
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$0
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$0
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1 Includes assessable income, reportable fringe benefits and reportable employer super contributions.
2 Figures are for the 2009/2010 and are indexed each year in line with AWOTE.
A link to a brochure providing more detailed information is attached below.
Government Co-Contribution Flyer with details around payment optionsWhat to do?
You can make after-tax super contributions to your account with MLC Masterkey in one of two ways:
- Send a cheque made payable to ‘MLC Nominees Pty Ltd’ along with the completed form on page 2 of the form above
- BPay® directly from your cheque or savings account. If you are making a payment via BPay®, clarify the cut off time with your financial institution and allow sufficient time for the funds to be received by us by 30 June. The brochure above outlines the biller codes for different super products.
Otherwise if your superannuation is with another Superannuation Fund Manager please contact them directly to organise the most efficient and convenient payment method (i.e. cheque, electronic funds transfer, BPay®).
2. Contribute for your Spouse and Save Tax
If your spouse earns less than $10,800 per annum, you may be able to make an after-tax contribution of up to $3,000 to your spouse’s super fund, which means that you could be eligible to claim a tax offset of up to $540. This offset will reduce your tax this financial year and you could use the money to make additional super contributions for your spouse (or yourself) next financial year. No rebate is payable if your spouse earns more than $13,800.
What to do?
Contact your superannuation fund directly to organise the most efficient and convenient payment method (i.e. cheque, electronic funds transfer, BPay®).
3. Super contribution splitting
Did you know you could be eligible to split certain super contributions into your spouse’s super account? This strategy could mean you receive your combined super more tax-effectively before age 60.
Also, if you have an older spouse, they’ll be able to receive the money tax-free earlier than you, when they reach age 60. For example, if you’re 50, your spouse is 55 and you transfer super contributions into their account, they can take the money as a tax-free pension or lump sum five years earlier than you.
What to do?
If your superannuation is with MLC please refer to the links below for an explanation of how to complete the Contributions Splitting Application Form.
Contribution Splitting Application Form & Instruction GuideOtherwise if your superannuation is with another Superannuation Fund Manager please contact them directly to organise the most efficient and convenient contribution splitting method.
4. Boost Savings and Save Tax via Salary Sacrifice
Want to reduce your overall tax burden? Salary sacrificing could help. Salary sacrificing involves contributing part of your pre-tax salary into super.
This beauty of this strategy is that the contributions are taxed at a maximum rate of 15%, not your marginal rate of up to 46.5%.
If you’re over 50, you can receive contributions from your employer (including salary sacrifice) of up to $50,000 without incurring a penalty, but only for this and the following two financial years. After that, the cap drops to $25,000 pa. So make the most of this super saving now while you can!
What to do?
See your employer/payroll person requesting that any potential bonus be sacrificed to super. If in doubt contact your Adviser.
5. Pre-paid interest
Did you know if you prepay the interest on your investment loan for the next 12 months before 30 June, you may be able to claim a tax deduction for that interest in this year’s income tax return?
For example, if you prepay interest on a $100,000 investment loan and the interest rate is 7% pa, you could save $2,765 in tax (if your marginal rate is 39.5%). This strategy could mean a significant reduction in your tax for this financial year. We can also discuss ways to make this payment while minimising the impact to your cash flow.
What to do?
Contact your Adviser to action these opportunities.
6. Personal deductible super contributions
If you’re self-employed or under age 65 and recently retired, and you make personal super contributions before 30 June, you may be able to claim these as a tax deduction. This strategy could significantly increase your super and reduce your tax.
For example, if you’re over 50, you can claim a deduction for up to $50,000 without incurring a penalty, but only for this year and the following two financial years. After that, the cap drops to $25,000 pa. So make the most of this super saving now while you can!
What to do?
Contact your Adviser to action this opportunity.
7. Pre-retirement pension
If you’re employed or self-employed and you’ve reached your preservation age, you could be eligible to access your super using a pre-retirement pension, also known as a ‘Transition to Retirement Pension (TTR).
For example, if you’re 55, you can use preserved or restricted super benefits to start a TRP. And at the same time you make salary sacrifice or personal deductible super contributons into super.
By using this strategy, you could boost your retirement savings, pay less tax and maintain your after-tax income while you’re still working!
What to do?
Contact your Adviser to action this opportunity.
A Final Word
Please note that this information is of a general nature and should not constitute advice. You should not implement a strategy purely on a tax basis. Please speak with us prior to taking any action.
General Advice Warning: The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
GWM Adviser Services Limited ABN 96 002 071 749 trading as Garvan Financial Planning, registered office 105 - 153 Miller Street North Sydney NSW 2060, is an Australian Financial Services Licensee and member of the National Australia Bank group of companies. From time to time Garvan Financial Planning, members of the National Australia Bank group of companies, associated employees or agents may have an interest in or receive pecuniary and non pecuniary benefits from the financial products and services mentioned herein.
