Finance Your Super Five super things to do before end of financial year

Five super things to do before end of financial year

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With only a few weeks to go until the end of the current financial year, time is running out to make some important superannuation decisions.

A number require immediate action to ensure there’s enough time to implement them before the close of business on June 30, which this year falls on a Monday.

Unfortunately, there’s no margin for error.

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Make a pre-tax super contribution

When an employer contributes superannuation on a worker’s behalf, those contributions are taxed at 15 per cent.

All workers are able to make additional “before-tax” contributions at the concessional 15 per cent tax rate through salary sacrifice arrangements with their employer.

Make sure these arrangements are in place and the payment to your, or your spouse’s, account is made well before June 30, says AustralianSuper engagement executive Georgina Williams.

“Be sure to check you won’t go over the allowable limits for either before-tax or after-tax contributions. For some people, an after-tax contribution may also qualify them for the government’s co-contribution,” Ms Williams said.

For those younger than 50, up to $30,000 can be contributed into super in total this financial year at the concessional tax rate. For those 50 or over, the limit is $35,000.

A super top-up before June 30, especially using pre-tax dollars, makes a lot of sense. Getty
A super top-up before June 30, especially using pre-tax dollars, makes a lot of sense. Photo: Getty

At this late stage in the financial year, timing is of the essence so check now the due dates with your pay office.

Make an after-tax super contribution

Individuals can also make after-tax contributions into their account before June 30, using money on which tax has already been paid.

These are attractive as they deliver a 15 per cent tax rate on earnings instead of your marginal tax rate outside of super.

Those earning less than $50,454 per year may also be entitled to a government co-contribution up to $500.

A person wanting to top up their super from an inheritance, or funds received from the sale of a property or business, can currently contribute up to $180,000 in a financial year.

The government announced in this year’s federal budget that effective from May 3 this year, the lifetime cap on after-tax contributions is $500,000, backdated to July 1, 2007.

Check your investment allocations

You could choose a greater exposure to foreign shares. Photo:AAP
You could choose a greater exposure to foreign shares. Photo: AAP

“The end of the financial year is a good time to consolidate your superannuation accounts. Combining several accounts into one will save you money on fees,” AustralianSuper’s Georgina Williams said.

“It is also a good time to check on the performance of your super fund and compare it to both industry benchmarks and other funds.”

These comparisons should help you readjust your investment allocations.

Check your insurance cover

Insurance cover is another area fund members should check, using June 30 as a marker date.

Industry funds provide default insurance cover to members, generally for life and total and permanent disability (TPD), and in some cases income protection.

Members are able to increase their insurance by buying additional units of cover, generally at highly competitive rates.

Splitting contributions can be a good investment strategy. Getty
Splitting contributions can be a good investment strategy. Photo: Getty

June 30 can be a good time to review your insurance arrangement taking into account changing life needs.

Split with your spouse

Super rules allow contributions to be split with spouses up to a level of 85 per cent which is useful in building up the balance of a partner on a lower or zero income level.

Other advantages include gaining early access to the super of the spouse who reaches pension age first.

The 85 per per cent rule works like this: if you have $10,000 of employer contributions in a year, the after-tax value of these contributions will be $8500, and you can share some or all of this with your spouse’s superannuation account.

DISCLOSURE: The New Daily is owned by a group of industry super funds.

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