Welcome to the end of Financial Year as it fast approaches.
Creating and managing tax-efficient financial planning strategies is now a continual process that occurs throughout the financial year and is not left to the last moment.
Today, I will recap on some of the more common strategies.
Concessional superannuation contributions are contributions made by your employer or yourself on your behalf and are claimed as a tax deduction by your employer or you personally. The total cap for concessional contributions for the 24/25 Financial Year is $30,000 and is the sum of employer contributions, and individual contributions claimed as a deduction. Additionally, suppose your superannuation balance was less than $500,000 on 30 June of the prior financial year. In that case, you may also be able to contribute and claim as a tax deduction the sum of unused concessional contributions for the previous five years.
Note that this strategy involves complexity, and it should be approached with caution if you are seeking to implement it yourself.
With concessional super contributions, it is crucial to observe the superannuation fund cut-off dates. There are numerous stories of people missing out because they didn’t realise that funds need to be cleared in their member superannuation account for the contribution to be counted. We aim to have all contributions affected two weeks prior to the end of the financial year – this year by 16 June 2025. Remember, employers have until 28 July 2025 to make contributions for the quarter ending 30 June 2025. Often, people plan on their employer making the contribution; however, it falls into a new financial year. It is not an exact science; you need to verify.
Non-concessional contributions apply to super contributions where no tax deduction is claimed. The non-concessional cap is $120,000 this financial year, provided you have a Total Superannuation Balance (TSB); read the sum of all your super accounts of less than $1.9 mil on 30 June 2024. Additionally, you can bring forward three years of contributions or $360,000 if your TSB is less than 1.66mil on 30 June 2024. Sorry for getting too technical – but it is!
The spouse contribution tax offset is another useful strategy. Where you have a spouse with an assessable income of less than $37,000 (this includes any fringe benefits and employer super contributions) then a $1,000 non-concessional contribution to your spouse’s account will provide an 18% tax rebate ($540) to the contributing spouse.
For income earners with an annual income of less than $45,500, considering a non-concessional contribution to super of $1,000 may attract a maximum co-contribution from the Government of $500. A 50% return with no risk!
These are some of the general strategies. There are other more complex strategies, as mentioned previously, while some of these strategies seem straightforward, all of them require planning, precision and timeliness.
Poorly executed, they will often be struck down and could cost you money!
Have a good end of Financial Year.