With the end of the financial year fast approaching, it’s a great time to build and protect your wealth in a tax-effective manner. The following 12 super strategies have the potential to make a significant difference to your financial situation now.
1. Get more from your bonus
If you are likely to receive a bonus from your employer, you may want to salary sacrifice your bonus into super rather than receive it as cash. So you can reduce tax on your bonus by up to 31.5% and make a larger after-tax investment.
2. Make tax deducible super contributions
If you earn less than 10% of your income1 from eligible employment (eg you are self-employed or not employed), you may want to invest in super and claim your contribution as a tax deduction. You can use the deduction to offset taxable income, save on tax and build and protect wealth outside your business (if applicable).
3. Get a super top up from the Government
If you earn less than $61,9201pa, of which at least 10% is from employment or a business, you may want to make a personal after-tax super contribution. You can qualify for a Government co-contribution of up to $1,000 and increase your retirement savings.
4. Boost partner’s super and reduce your tax
If you have a spouse who earns less than $13,8001pa, you may want to make an after-tax super contribution on their behalf. You can receive a tax offset of up to $540 and increase your spouse’s retirement savings.
5. Pay less tax on investment earnings
If you have an investment in your own name, you may want to cash out the investment and use the money to make a personal after-tax super contribution. You can reduce tax on investment earnings by up to 31.5% and increase your retirement savings.
6. Use super to manage CGT
If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income1 from eligible employment, you may want to invest the sale proceeds in super and claim a portion of the contribution as a tax deduction. You can use the deduction to offset your taxable capital gain and save on tax and increase your retirement savings.
7. Make insurance more affordable
If you are eligible to make salary sacrifice super contributions, to receive Government co-contributions, have a spouse who earns less than $13,8001pa or earn less than 10% of your income1 from eligible employment, you may want to purchase life and total and permanent disability insurance in a super fund. You can benefit from tax concessions and make premiums more affordable.
8. Pay less tax on super benefits
If you are under age 60 and want to cash out some of your super, you may want to delay the withdrawal until you reach an older age bracket (eg. 60 or over). You can save lump sum tax and make a larger after-tax investment.
9. Gain from a capital loss
If you have received capital gains from your investments, you may want to trigger a capital gains loss by selling a poorly performing investment that no longer suits your circumstances. You can use the capital loss to offset your taxable capital gain and save tax, and free up money for more suitable investment opportunities.
10. Defer asset sales to save tax
If you are thinking of selling a profitable asset this financial year, you may want to defer the sale until a future financial year. You can defer paying Capital Gains Tax (CGT) and reduce your CGT liability.
11. Pre-pay investment loan interest and reduce this year’s tax
If you have (or are considering establishing) a geared investment portfolio, you may want to pre-pay 12 months’ interest on your investment loan. You can bring forward your tax deduction and pay less income tax this financial year.
12. Pre-pay income-protection premiums and reduce this year’s tax
If you are employed or self-employed, you may want to pre-pay 12 months’ income protection insurance premiums. You can bring forward your tax deduction and pay less income tax this financial year.
Note: To use strategies 1 to 8, you generally need to be eligible to make super contributions. Furthermore you won’t be able to access your super until you satisfy a condition of release. See a Financial Planner for more information. 1 Includes assessable income, reportable fringe benefits and reportable employer super contributions. Other eligibility conditions apply.
Contact a Financial Planner at McConachie Stedman to discuss these strategies further on
07 4632 1966.
