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Boosting Your Superannuation: Seven Powerful Strategies

Caroline Gillies • February 22, 2024

Boosting Your Superannuation: Seven Powerful Strategies

1.   Maximising Tax-Deductible Contributions: Historically, salary sacrifice has been a popular method to bolster one's superannuation savings while enjoying tax advantages. Contributions made through this method are taxed at a favourable rate of 15%, compared to the individual's marginal tax rate, which can reach up to 45%. Recent changes have made these pre-tax contributions, known as concessional contributions, more flexible. Individuals can inject funds into their super at any time and claim a tax deduction, up to the annual cap of $27,500. From 1 July 2024 the concessional contribution cap will increase from $27,500 to $30,000.
 

2.   Leveraging Catch-Up Contributions: Individuals with a super balance below $500,000 at the beginning of a financial year can tap into unused concessional contribution caps from the previous five years. This presents a valuable tax planning opportunity, particularly for those experiencing significant capital gains events, such as selling investments, as they can mitigate a substantial portion of the tax liability by channelling additional funds into their super.


3.   Harnessing Co-Contributions: The government offers incentives for lower-income earners by matching contributions of up to $500 annually for those who deposit $1000 of after-tax income into their super fund. Eligibility varies based on income, with individuals earning below $58,445 qualifying for partial co-contributions, and those earning under $43,445 eligible for the full $500, providing an impressive 50% return on their investment.


4.   Utilising Spouse Contributions: Couples can optimise their super balances and tax savings by contributing to the account of a low-income spouse. Individuals can claim a tax offset of up to $540 by depositing $3,000 into their spouse's fund, provided the spouse earns below $40,000.


5.   Implementing Super Splitting: As couples approach retirement, maintaining similar super balances becomes crucial for managing asset caps, retirement income, and insurance. Super splitting allows individuals to transfer up to 85% of their pre-tax super contributions from the previous financial year to their spouse's account, subject to their fund's policies.


6.   Capitalising on Age Advantages: Transferring superannuation funds into the account of a younger spouse as one partner reaches pension age can strategically shield assets from Centrelink's assets testing, potentially increasing eligibility for age pension benefits.


7.   Exploring Downsizing Opportunities: Individuals aged over 55 who downsize their homes can inject an additional $300,000 from the sale proceeds into their super without affecting other contribution caps. This includes the annual $110,000 cap for after-tax contributions (to rise to $120,000 after 1 July 2024), providing a valuable avenue for boosting retirement savings.


If you would like to discuss any of these strategies further we recommend contacting your Financial Planner.

Reducing Tax by Paying into Super and Carry-Forward Contributions: Key Points

By Caroline Gillies • March 27, 2025
As the end of the financial year approaches, many Australians are looking for ways to reduce their tax burden, and one effective strategy is contributing to superannuation. Paying into super can help reduce your taxable income while also boosting your retirement savings. One of the most beneficial options is to take advantage of carry-forward contributions , which allow you to use unused concessional caps from previous years.  How Super Contributions Reduce Tax Contributing to your super fund can lower your taxable income, as concessional contributions (before-tax contributions) are taxed at a lower rate of 15%, rather than your marginal tax rate. This means that if you’re a high-income earner, salary sacrificing or making personal deductible contributions can significantly reduce your tax bill. The concessional contribution cap increased on 1 July 2024 to $30,000, which includes employer contributions, salary sacrifice, and personal contributions for which you claim a tax deduction. Carry-Forward Contributions The carry-forward contributions rule allows you to use unused concessional contribution caps from previous years. You can carry forward unused caps for up to five years . For instance, if you didn't reach the $27,500 cap in past years, you can make larger contributions this year by carrying forward the unused portion. Which Financial Year is About to Drop Off? As the 2024-25 financial year ends, unused caps from 2019–2020 will drop off on 30 June 2025. This means any unused contribution space from that year won’t be available after this date. If you haven't maximised your contributions in previous years, now is the time to catch up. Benefits of Carrying Forward Contributions Maximise Super Savings: You can top up your super by using unused cap space from previous years. Tax Reduction: Making larger concessional contributions can reduce your taxable income and save on tax. More Growth: Additional contributions allow for greater compounding growth in your super. Things to Remember To carry forward unused caps, your super balance must be less than $500,000 . If you exceed the concessional cap, excess contributions are taxed at your marginal rate plus an additional 15% penalty. Contributions must be made by 30 June 2025 to count towards this financial year. If you would like to take advantage of the carry-forward contributions before 30 June 2025 and need help, call us today at 4688 2500 to make an appointment.

Lifeblood of Your Business

By Caroline Gillies • February 9, 2025
 The metaphors we use when talking about money are both intriguing and revealing. When we overspend, we say we're "bleeding" cash; when it arrives out of the blue, it's "pennies from heaven." Money holds such importance in our lives, yet so many businesses seem to throw it around without a clear budget. Sticking to a budget is a fundamental aspect of financial health. It also signals to others that you're in control and on top of things. Keeping your business on budget doesn’t have to be a hassle—think of it as a creative challenge. If you're open to putting in the work and making some tough choices, sticking to a budget can be the best workout for your business mind. Do you know how to build a budget that keeps your business safe from financial troubles? We do, and we’re here to help you create a budget that works—and ensures you stick to it. If you need help with your budget give us a call today 4688 2500.

Clearance Certificates - Australian Residents

By Caroline Gillies • January 16, 2025
From 1 January 2025 all Australians selling property need a clearance certificate to prevent a portion of the sale price from being withheld. While it is understood that most lawyers are handling this process for their clients, it’s important for everyone involved to be aware of this requirement. Clearance certificates for Australian residents All Australian residents (for tax purposes) selling or disposing of Australian real property (property) must have a clearance certificate and give it to the purchaser at, or before settlement. Without a clearance certificate, the purchaser must withhold up to 15% of the sale (or market value if not sold at arm's length) for foreign resident capital gains withholding (FRCGW) purposes. Example: the importance of getting a clearance certificate early – 15% withheld from sale Willow and Stanley are Australian residents for tax purposes. On 1 September 2024 they decide to sell their family home, their main residence. They need the funds from the sale to purchase a new residence. They are both listed as owners of the property on the certificate of title, so both must apply for their own clearance certificate. They find a purchaser on 8 January 2025 and sign the contract of sale, with a settlement 30 days later on 6 February. They don’t apply for a clearance certificate until 15 January and don't have both of their clearance certificates at, or before settlement. The property sold for $600,000, however: • Willow's clearance certificate issued and was given to the purchaser • Stanley was still waiting for his clearance certificate. The sale goes through and settlement occurs. As Stanley didn't have a clearance certificate at settlement, 15% of Stanley's share of the sale ($90,000) must be withheld by the purchaser and paid to us. Stanley must wait until his 2025 tax return is lodged and processed for a refund. As the purchaser had received a clearance certificate from Willow, there's no withholding required on her share of the sale. (Example provided by the ATO website) If you would like to read more about Clearance Certificates, please click on the below link: https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/foreign-residents-and-capital-gains-tax/foreign-resident-capital-gains-withholding/australian-residents-and-clearance-certificates#ato-ClearancecertificatesforAustralianresidents
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