New super rules that took effect on 1 July this year have created new opportunities to contribute to super.
Consider making personal deductible contributions
Prior to 1 July 2017, if you earned more than 10% of your income from eligible employment, you could not make personal deductible super contributions (PDCs).
This ‘10% income test’ has now been removed and, as a result, it is possible to make PDCs regardless of your employment status.
PDCs are super contributions that are made personally (not by an employer) which can be claimed as a tax deduction to reduce your taxable income and income tax payable.
Like salary sacrifice, they are concessionally taxed in the super fund at a maximum rate of 15% (or 30% if your income from certain sources is over $250,000 in FY2017/18).
Consider making spouse contributions
A tax offset of up to $540 is available if you contribute to your spouse’s super account and they earn less than $40,000 pa. (previously $13,800 pa).
It may therefore be worthwhile re-considering spouse super contributions if your spouse is a lower income earner.
Consider making ‘catch-up’ concessional contributions
From 1 July 2018, if you don’t use up the entire annual concessional contribution cap (currently $25,000) you will be able to accrue the unused amounts for use in subsequent years.
Unused amounts can be carried forward on a five year rolling basis. 2019/20 is the first financial year it will be possible to use the carried forward amounts.
To be eligible, your super balance cannot exceed $500,000 on 30 June of the previous financial year.
If eligible, this new opportunity will help those unable to utilise the concessional contribution cap due to broken work patterns and competing financial commitments.
It could also help to manage tax and get more money into super when selling assets that result in a capital gain.
We can help you decide on the strategies that work best for you – so get in touch (08) 8232 9498 to make an appointment to discuss.
Important information and disclaimer
This publication has been prepared by Wallis-Smith Financial Services Pty Ltd ACN 112 623 613 t/a Wallis-Smith Financial Planning, Sam Wallis-Smith & Victoria Wallis-Smith are authorised representatives of GWM Adviser Services Ltd ABN 96 002 071 749 an Australian Finanmcial Services Licensee with its registered office at 105/153 Miller Street, North Sydney NSW 2060.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.
Information in this publication is accurate as at the date of writing (July 2017). In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.
Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of the NAB Group, nor their employees or directors give any warranty of accuracy, or accept any responsibility for errors or omissions in this document.
Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.