It seems like Christmas was only yesterday, but believe it or not, the end of financial year is just around the corner. That means it’s time to look out for opportunities to save on tax and boost your wealth accumulation plans.
There is no better time than the end of financial year to make a review of your financial situation to see what openings you can take advantage of to further your financial goals.
The stakes are high and time is tight, so we have summarised the key opportunities here to get you inspired to take action now.
With lots of noise coming from Canberra about superannuation concessions being under the microscope, it makes it doubly important to make sure you maximise all the benefits while you can.
Both sides of politics are walking a political tightrope in their quest to balance the budget without killing off incentives for individuals to self-fund their retirement. With an election on the horizon, who knows where the chips will fall on super concessions in the next couple of years.
Top up while you can
One area that has already seen changes in the last few years is that of contribution caps. These caps relate to maximum annual limits on any before tax contributions you make in a given year, (such as salary sacrifice arrangements or tax deductible contributions). Going above these limits may incur tax penalties.
The good news is that for this financial year the caps will remain as they were last year:
- $30,000 if you are under 50 and
- $35,000 if you turn 50 during this tax year or if you are older.
If your contributions this financial year have not reached the caps, then you now have the opportunity to top up and receive the concessional tax benefit on those contributions. The recent rumblings surrounding super tax treatment and the proposals announced in the Federal Budget means there is no certainty on what these caps will be in the future, so it may be wise to speak to your Matrix financial adviser now if you want to take advantage while you can.
Spouse contributions can trim your tax
Another tax saving possibility is the spouse contribution scheme. If your spouse is not employed or has part-time work with an income of less than $13,800, then you can make contributions to their super on their behalf and claim a tax offset.
A maximum offset of $540 is available if the spouse income is $10,800 or less and you make an after-tax contribution of at least $3000 to their super. The tax offset is progressively reduced until the spouse earns $13,800 or more in a year.
Co-contribution incentive still applies
Another incentive that is still valid this tax year is the government co-contribution scheme. This scheme gives you the chance to have the government chip in up to $500 to your super if your income is less than $35,454 and you make voluntary after tax contributions to your super.
The rate of co-contribution is 50 cents for every dollar you contribute. If you earn more than $35,454 the rate of co-contribution reduces on a sliding scale until it cuts out completely at $50,454.
Your adviser is ready to show you how you can make the most of your entitlements and grow your retirement independence, so talk to them now if any of these opportunities are of interest.