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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.

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

Good news for Clients with Student Loans - Study loan indexation change

By Caroline Gillies • December 5, 2024
We wanted to bring to your attention some important changes regarding student and training loan indexation that have just passed through Parliament. The law is changing how the indexation on student loans is calculated. In the past, indexation has been based solely on the Consumer Price Index (CPI) . However, moving forward, the indexation rate will be based on the lower of either the CPI or the Wage Price Index (WPI) . This new rule will be backdated to 1 June 2023 , which means it will affect loans from that date onward. Here’s how the updated indexation rates break down: 3.2% for 1 June 2023 (reduced from 7.1%) 4% for 1 June 2024 (reduced from 4.7%). Impact on Your Loan If your loan has been over-indexed in the past two years, you may be entitled to a refund . The Australian Taxation Office (ATO) will automatically adjust your account to reflect the new, lower rates and will process refunds for any excess amounts already paid. This means: If after the adjustment, your account is showing a credit (i.e., you've paid more than required), this excess will be refunded to your nominated bank account provided you have no outstanding tax or other Commonwealth debts . If your loan is in credit after the adjustment, any remaining funds may be transferred to offset your income tax account (if applicable), and the remainder will be refunded to you. What You Need to Do For most clients, there’s nothing you need to do at this stage. The ATO will automatically recredit excess amounts to your account once the legislation receives Royal Assent , and this process will begin soon after. You should expect to see these credits applied to your account by the end of January 2025 . However, in some cases, due to the complexity of individual accounts, it might take a bit longer. Unfortunately, the ATO cannot provide a list of exactly which clients will receive refunds, as they will only know once all recredits are processed. We drew inspiration to write this article from the ATO
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