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- 1. Lodge your super withdrawal request (if you must)
- 2. Make your contributions before 30 June
- 3. Check your super caps before contributing
- 4. Watch your Total Super Balance
- 5. Consider making a personal (or voluntary) tax-deductible contribution
- 6. Ensure you pass the work test
- 7. Check your insurance cover
- 8. Consider using carry-forward concessional cap amounts
- 9. Think about boosting your spouse’s super balance
- 10. Set up your salary sacrifice arrangement
With 2019/20 turning out to be a financial year like no other, it’s easy to forget about keeping your super and tax affairs in order. But that’s a big mistake, as all your paperwork will still be needed when it comes time to lodge your tax return – coronavirus or no coronavirus.
To help ensure you have maximised the tax benefits available within the super system, here’s SuperGuide’s top 10 tips for this year’s financial year-end (EOFY).
1. Lodge your super withdrawal request (if you must)
If you are suffering financial hardship as a result of COVID-19, ensure you lodge your request to make a withdrawal from your super account before 30 June. Under this temporary measure announced by the federal government, you can seek early release of $10,000 from your super account this financial year (and an additional $10,000 from 1 July 2020).
You will need to submit a separate application by 24 September 2020 if you want to access the additional $10,000 next financial year.
For more information, read SuperGuide article Early release of super due to COVID-19 (coronavirus).
2. Make your contributions before 30 June
If you want to have a super contribution counted in the 2019/20 financial year, you need to ensure your super fund receives it by 30 June 2020. This is particularly important if you plan to claim a tax deduction for any of your contributions (see section below).
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The key date for making contributions is not when you make the payment, but when it’s received by your super fund. Even though many banks and financial institutions now offer instant payments, electronic fund transfers and BPAY can take a number of days to appear in your super account.
Need to know – For employers
If you are an employer, you only receive a tax deduction for making employee Superannuation Guarantee (SG) contributions in the same financial year the SG contributions are received by the super fund. So ensure you make SG payments well before 30 June if you want to claim a deduction for them in the 2019/20 financial year.
Contributions are considered paid when the super fund receives them. Missed payments may attract the super guarantee charge (SGC), which is not tax-deductible. For more information, see the ATO website here.
For more on super contributions, read SuperGuide article What super contributions are best for me?
3. Check your super caps before contributing
There are annual caps on how much you can contribute into your super account, so it’s essential to monitor the total amount of both your concessional (before-tax) and non-concessional (after-tax) contributions across all your super accounts before making a pre-30 June contribution.
Check whether any payments intended for the 2018/19 year slipped into this financial year to ensure you don’t breach your contribution caps.
Need to know
The key contribution caps for 2019/20 are $25,000 for concessional (before-tax) contributions and $100,000 for non-concessional (after-tax) contributions.
Don’t forget your concessional contributions include all your employer’s SG contributions, salary sacrifice amounts and any personal contributions for which you plan to claim a tax deduction.
It’s also a good idea to confirm with your employer when the electronic payment of contributions (e.g. salary sacrifice and SG amounts) will be made to your super fund, so you know whether or not it will hit your super account by 30 June.
Your employer is not required to make their SG contributions for the April to June quarter until 28 July 2020, which is in the next financial year. Many employers will be struggling to make cashflow and employment payments due to the COVID-19 lockdown, so they may not make their SG contributions as promptly as normal.
For more information, read SuperGuide articles:
- What to do if you exceed your super contributions caps
- 2020/21 guide to concessional contributions (before-tax super contributions)
- What to do if your employer doesn’t pay your super
4. Watch your Total Super Balance
If you plan to make a non-concessional (after-tax) contribution into your super account before financial year-end, it’s essential to check what your Total Superannuation Balance (TSB) was on 30 June 2019.
Good to know
Your TSB is used to track and limit the amount of savings you can have in the super system. A TSB consists of all your accumulation phase and retirement phase super interests, plus any rolled over super benefits.
If your TSB was $1.6 million or more on 30 June 2019, you are not eligible to make any non-concessional contributions during 2019/20 without triggering an excess contribution and paying additional tax on the contribution.
For more information, read SuperGuide article What is included in my Total Superannuation Balance, and when does it apply?
5. Consider making a personal (or voluntary) tax-deductible contribution
If you have the available funds, now could be a good time to make a one-off contribution into your super account. Since 1 July 2017, eligible Australians aged under 75 have been able to claim a tax deduction if they make a personal contribution into their super account up to the concessional contributions cap. The contribution is open to employees, the self-employed and investors.
A personal super contribution can be worthwhile considering, as earnings on your super are taxed at a maximum rate of 15%, whereas earnings on personal investments outside the super system are taxed at your marginal income tax rate (up to 45%).
While most people think about making extra personal super contributions from their employment or self-employed income, don’t forget it’s also possible to make super contributions from investment income (including dividends or rental income) and capital gains.
For more information, read SuperGuide articles How do tax-deductible superannuation contributions work? and 2020/21 guide to non-concessional contributions (after-tax super contributions).
6. Ensure you pass the work test
If you are over age 65, it’s essential to check you can meet the conditions of the work test before making additional super contributions prior to 30 June 2020. The work test applies if you are aged 65 and above when you decided to make a voluntary personal contribution into your super account. Under the work test rules, you must have been ‘gainfully employed’ for at least 40 hours in 30 consecutive days during 2019/20 if you wish to make a personal super contribution.
Once you reach age 75, you will not be able to make non-concessional or personal tax-deductible contributions, regardless of your work status. You can only claim a tax deduction for super contributions you make before the 28th day of the month following the month you turned 75.
Need to know
As part of the 2019/20 Federal Budget, the government announced that from 1 July 2020 people aged 65 or 66 would be able to make voluntary personal super contributions without having to meet the work test. This proposal has yet to be legislated.
For more information, see the following SuperGuide articles:
- Work test: Making super contributions over 67
- How to contribute to your super in your late 60s: What are the rules?
- In your teens? The super rules that apply to you
- In your 20s, 30s or 40s? The super rules that apply to you
- In your 50s? The super rules that apply to you
- In your 60s? The super rules that apply to you
- In your 70s? The super rules that apply to you
7. Check your insurance cover
On 1 April 2020, the rules changed on when default insurance cover is provided to members by their super fund. Some members will have lost their default insurance cover if they didn’t fill in the necessary paperwork to opt-in for insurance.
So now is a good time to check if you are still covered. Under the new rules, insurance is only available to new fund members aged under 25 or with a balance below $6,000 if you opt-in. If you don’t have insurance cover, consider contacting your super fund to apply for insurance protection.
The cover provided by your super fund can be very cost-effective and it’s usually easy to sign-up. For more information, read SuperGuide articles Insurance inside super: A definitive guide and Super funds with the lowest fees for life and TPD insurance.
8. Consider using carry-forward concessional cap amounts
Super fund members who did not use all their $25,000 concessional (before-tax) contributions cap in 2018/19 are permitted to carry-forward the unused amount on a rolling basis for five years, so think about making a concessional contribution before 30 June 2020.
The 2019/20 financial year is the first financial year in which you are able to use any of an unused concessional contributions cap from a previous year, so it could be a good way to boost your super balance.
Generally, the same rules apply to carry-forward contributions as normal concessional (before-tax) contributions, including the age-based limits. This means individuals under the age of 65 – and those aged 65 to 74 who pass the work test or work test exemption rules – can make carry-forward contributions.
Need to know
If you are thinking about taking advantage of the carry-forward rules this financial year (2019/20), it’s essential to check your Total Super Balance (TSB) was under $500,000 on 30 June 2019.
For more information, read SuperGuide article Carry-forward contributions: How your unused contributions cap can help you catch up.
9. Think about boosting your spouse’s super balance
Given the financial turmoil currently being experienced by many Aussie households, the approaching financial year-end could mean now is a good time to analyse how your finances are going. Your retirement savings are a key area to review.
If the balances of you and your partner’s super accounts are very different, consider submitting a request to split some of your super contribution with your spouse to even them up. Requests to split need to be made by 30 June of the financial year following the year the contributions were made, so you can split some of your 2018/19 super contributions if you lodge a request with your super fund by 30 June 2020.
If your spouse has a total income below $37,000, it’s also worth considering making a contribution into their super account to help boost their retirement savings – and possibly earn yourself a tax deduction.
Eligible contributions into your spouse’s super account of up to $3,000 may provide you with a tax offset on your tax bill of up to $540. If your spouse’s total income is up to $40,000, you can still qualify for the offset, but the amount will be less.
Need to know
In the 2019/20 Federal Budget, the government proposed lifting the age limit for receiving spouse contributions from the current limit to age 74. In addition, where the receiving spouse is age 65 or 66, they would no longer need to meet the work test. Both of these proposals are yet to be legislated.
For more information, read SuperGuide article Contribution splitting: How to boost your spouse’s super.
10. Set up your salary sacrifice arrangement
If your super balance has taken a hammering due to the recent investment market volatility – but you are lucky enough to still have secure employment – now is a good time to talk to your employer about setting up a salary sacrifice arrangement for 2020/21.
Salary sacrifice is an arrangement where part of your before-tax salary is paid into your super account rather than being paid to you as take-home pay and it can be a tax-effective way to boost your super account.
To be valid, a salary sacrifice arrangement needs to be set up before the start of the new financial year, so ensure you have the arrangement fully documented before 30 June.
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