EOFY Superannuation Planning
Watch your superannuation contribution limits
You may wish to consider maximising your concessional or non-concessional contributions before the end of the financial year but keep in mind the contribution caps were reduced from 1 July 2017.
The concessional contribution cap for the 2017-18 financial year is only $25,000. Concessional contributions include any contributions made by your employer, salary sacrificed amounts and personal contributions claimed as a tax deduction by self-employed or substantially self-employed persons.
If you're making extra contributions to your super and breach the concessional cap, the excess contributions over the cap will be taxed at your marginal tax rate, although you can have the excess contribution refunded from your super fund.
Similarly, the annual non-concessional (post-tax) contributions cap is only $100,000 and the three year bring-forward provision is $300,000. Individuals with a balance of $1.6 million or more are no longer eligible to make non-concessional contributions.
High-income earners are also reminded that the contributions tax on concessional contributions is effectively doubled from the normal 15 per cent rate to 30 per cent if their combined income plus concessional contributions exceeds $250,000.
Importantly, don't leave it until 30 June to make your contributions as your super fund may not receive the contribution in time and it will count towards next year's contribution caps, which could result in excess contributions and an unexpected tax bill.
Claim a tax deduction for your superannuation contributions
Claiming a tax deduction for personal superannuation contributions is no longer restricted to the self-employed. The rules changed on 1 July 2017 and anyone under the age of 75 will be able to claim contributions made from their after-tax income to a complying superannuation fund as fully tax deductible in the 2017-18 tax year.
Such a deduction cannot increase or create a tax loss to be carried forward. If you’re aged 65 or over you will have to satisfy the work test to contribute and if you’re under 18 at 30 June you can only claim the deduction if you earned income as an employee or business owner.
To claim the deduction, you will first need to lodge a Notice of intent to claim a deduction form with your superannuation fund by the earlier of the day you lodge your tax return or the end of the following income year. Any contributions you claim a deduction on will count towards your concessional contribution cap.
Employers can also claim deductions for superannuation contributions made on behalf of their employees.
Consider the superannuation co-contribution
An individual likely to earn less than $51,813 in the 2017-18 tax year should consider making after-tax contributions to their superannuation to qualify for the superannuation co-contribution if their circumstances permit.
The government will match after-tax contributions fifty cents for each dollar contributed up to a maximum of $500 for a person earning up to $36,813. The maximum then gradually reduces for every dollar of total income over $36,813 reducing to nil at $51,813.
Consolidate your super
For most employees, it makes a lot of sense to have your entire super in one place. You'll reduce the amount of fees you're paying, only receive one lot of paperwork and only have to keep track of one fund.
Consider consolidating the super funds you do have into one fund. Compare your funds to work out which best suits your needs. Important things to look at are fees and charges, the investment options available and life insurance cover.
In particular, if you have insurance cover in a fund, check that you can transfer or replace it in the new fund so you don’t end up losing the benefit altogether. You can look at past investment performance as well but remember it is no guarantee of how the fund will perform in the future.
Once you've chosen the fund you want to keep, contact them and they can help transfer the money from your other super funds.
If you've moved around or changed jobs occasionally, your old super fund may have lost track of you and you may miss out on some of your super when you need it. To find your lost super check out the ATO website.
This article is intended to be a guide only. None of the comments contained in the article are intended to be advice, whether legal, financial or professional. You should not act solely on the basis of the information contained in this article because many aspects of the material have been generalised and the tax laws apply differently to different people in different circumstances. Further, as tax and related laws change frequently, there may have been changes to the law since this article was published. Specific advice should always be obtained from a tax professional.