With the end of the financial year nearly upon us, it is vital you get your superannuation in order to maximise your contributions and the benefits you get for the current financial year.
If your boss has put you on JobKeeper because the business has been hit by the pandemic, you are entitled to continue receiving the Superannuation Guarantee [SG, generally 9.5 per cent of salary] for the $1500 a fortnight the scheme will be paying you.
But if JobKeeper actually increases your usual pay then you are not due to receive the SG on those extra amounts.
So check any documentation you are receiving from your boss to ensure the super has been paid.
If you’re still unclear on that call your fund. If no payments have been made call the boss again, preferably before June 30.
For people who hit hard times during the pandemic, the government allowed one-off withdrawals from superannuation of $10,000 this financial year and the same for the next.
If you’ve taken the money out this year and are finding you didn’t need it all don’t. Repeat: don’t. Get smart and put it back in as a concessional contribution into super.
While that would be a smart way to boost your balance and get a tax deduction at the same time, the ATO has warned it will crack down on such behaviour. Do it and you could finish up paying heavy penalties.
“If you want to make personal contributions above what your employer makes for you under the superannuation guarantee and you have not done so, then it is vital to act quickly,” said Chris Morcom of Hewison Private Wealth.
“They have to hit the super fund’s bank account by close of business on June 30 or you are too late.”
That means if you have extra cash you can contribute up to that amount less the SG contributions made by your boss and get an attractive tax concession.
Super contributions are taxed at 15 cents in the dollar so if you are paying more than that on wages or business income then a contribution will cut your tax bill.
For those wanting to make a non-concessional contribution, the limit is $100,000.
If you have got your hands on some extra cash you can now make catch-up contributions for the contributions cap you haven’t used back to 2018.
So that means you could contribute up to $50,000 in catch-up contributions this year as long as you have less than $500,000 in your super account.
To make sure both partners in a relationship receive maximum benefit from superannuation, the tax man allows you to split contributions.
This can work well where one party has a high income or has saved a significant balance and the other has not.
It can also be useful to allow an older partner to stay below asset or income test limits to maintain a bigger age pension allowance or a health care card in retirement.
The way it works is that you make a contribution as usual, but the following year you elect to put a portion of what you contribute into your spouse’s fund.
“For concessional contributions you can split up to 85 per cent and for non-concessional [after tax] contributions it can be 100 per cent,” Mr Morcom said.
While you don’t have to elect to split in this financial year, think about it now as it may affect the amount of money you choose to contribute above the SG this year.
This can be a useful way for low- to middle-income earners to get a government-backed boost to their super.
If you earn less than $38,564 and are under 71 and make a personal contribution of $1000 to your super, the government will kick in $500 to your fund.
If you earn between $38,564 and $53,564 the government payment will gradually reduce till you hit the top threshold.
To be eligible you will have to make the contribution this financial year so think about it right now.
Low-income spouse contribution
This is another way of getting a kick along for your super while at the same time aiding a low-income spouse.
“If your spouse earns less than $37,000 and you make a personal contribution of $3000 to their super account, the higher-income earner will get a tax offset of $540,” said Thabojan Rasiah, principal with Rasiah Advisory.
This benefit also phases down, with $57,000 in income being the cut-off point.
Receiving super pensions
If you are retired and your super fund is in pension mode, you have to make a decision about how much money you want to receive for the year.
If you have a self-managed super fund or you have elected to receive yearly payments from a pooled fund, you need to think about how much you want to withdraw and act on it before June 30.
Even if you have received most of your pension income this year, you can reduce it next year but increase it later if necessary.
“People are telling us that they might reduce pension withdrawals as with lockdown they haven’t been able to spend what they planned anyway,” Mr Rasiah said.
But remember no matter what you plan to do, act quickly so you can beat the June 30 deadline.
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