With the 2023/24 financial year drawing to a close, it’s worth considering making super contributions to maximise your tax savings.
Plus, Stage 3 tax cuts go live on 1 July, which could boost your income. So if you end up with tax savings in your pocket, it’s worth considering contributing to your super – and save on tax.
Now's the time to start planning so any extra money in your pocket is used effectively.
Iby Ibrahim [00:00:00] For most people, the only time of year we think about our tax, how much we pay and how much we can save is when completing a tax return. But spending a little time now to learn about some opportunities could make a big difference in your tax outcomes. Super is one of the most tax effective ways to invest. While you're working and contributing into super, you pay only 15% tax on that investment. When you're withdrawing your super, for most there's no tax. Now some tax topics can be complex. So remember it's always good to talk to a financial expert for help and guidance on what you could do. Let's jump right in with what you can do using your super. Before the end of financial year on June 30.
[00:00:45] We may be able to put money into super and claim a tax deduction. If you have spare cash to put into super, here's what you need to know. For most people, these contributions are taxed at only 15% instead of your usual tax rate, which could be as high as 47%. The cap for this financial year is $27,500. It's set to increase on July 1. If you will use all of this year's cap, there's also the Carry Forward rule, which allows you to make use of any unused concessional contributions from previous financial years. The last chance to take advantage of any unused contributions from the 2018-19 financial year is before 30 June this year.
[00:01:30] You could claim a tax offset of up to $540 when helping boost your partner's super. To receive the maximum offset, they need to be earning less than $37,000, and you need to put in $3,000 into their super. You can put in less, but the offset will be less.
[00:01:50] The government co-contribution is where the Government will put up to $500 straight in your super if you contribute $1,000. To be eligible for the maximum, you must be earning less than $43,445. You can put in less, but the co-contribution will be less. With all the contributions we've discussed, there are rules and limits. You can check on our website just to make sure you're eligible.
[00:02:20] Okay, let's talk about an exciting change in the new financial year. The tax cuts we've heard about recently start on the 1st of July, increasing the take home pay for most Australians. If you're in a position to do so, you could consider putting some into super, and here's why and how it could work. These tax cuts are just like getting a pay rise. You could put some of it into super via salary sacrifice and keep some to boost your income. The earlier you start, the bigger the benefit. If you want to explore more, go to our website for useful resources that can help you see the positive impact extra contributions make to your financial future. Whether retirement is in 1 or 10 years, the new tax year is a good time to think about what retirement might look like. These are just some of the strategies that could be used. Seeing a financial planner ensures you aren't missing out on any smart ways to make the most of your money. They can also help you feel confident and optimistic about your future.
Book in with one of our super experts by 10 June, and make the most of your tax savings with super before the end of this financial year.*
Book in with a qualified financial planner before 30 May to kickstart your plan into action. They can help maximise your tax opportunities and build a tailored strategy.*
If you have a partner that’s earning less than $37,000 a year, make a $3,000 contribution into their super and receive a tax offset up to $540. This tax offset reduces the more they earn and cuts out if they earn over$40,000.
Reduce your tax with catch-up concessional contributions under the carry forward rule. You can carry forward any unused concessional contributions for up to five financial years, starting from 2018/19.
The Government’s recently announced tax cuts that will commence from 1 July 2024:
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| Current financial year | 2024/2025 financial year | ||
|---|---|---|---|
| Taxable income |
Tax rate |
Taxable income | Tax rate |
| Up to $18,200 | Nil | Up to $18,200 | Nil |
| $18,201 - $45,000 | 19.0% | $18,201 - $45,000 | 16.0% |
| $45,001 - $120,000 | 32.5% | $45,001 - $135,000 | 30.0% |
| $120,001 - $180,000 | 37.0% | $135,001 - $190,000 | 37.0% |
| > $180,000 | 45.0% | > $190,000 | 45.0% |
Plus Medicare levy of 2%
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Source: https://www.etax.com.au/stage-3-tax-cuts-explained/)
Here’s how salary sacrificing can boost your super:
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* This is based on superannuation balance projections for a typical female member at age 55, invested in the Aware Super MySuper lifecycle strategy. Net investment return is based on CPI+ objectives. Results are based on today's dollar deflated using wage inflation of 3.5% p.a. Projected balances are rounded to the nearest $1000 and tax savings across 10 years is rounded to the nearest $10. These projections are estimates and not guaranteed. The actual amount of money you will get in your retirement may be very different from the estimates.
Concessional contributions refers to the money that goes into your super before it’s taxed, like compulsory payments from your employer or salary sacrifice contributions. These are taxed at 15% instead of your usual tax rate, which could be as high as 47%.
There’s a limit on how much you can pay into super at the lower 15% tax rate. This is called the concessional contributions cap and for this financial year is $27,500.
The cap increases on 1 July, so $30,000 can be put into your super each financial year at the lower tax rate of 15%.
Non-concessional contributions are voluntary contributions you can make using after-tax money. Currently, the annual non-concessional contributions cap is $110,000, but this will increase to $120,000 from 1 July 2024.
If you want to bundle your contributions by using the bring forward rule, you can make up to three years of non-concessional contributions into super in one year. To be eligible, you need to be under 75 and have a total super balance below the relevant threshold.
Here’s what you can contribute under the bring forward rules across this financial year, and the new amounts starting 1 July 2024.
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| Total super balance on 30 June of previous year 2024 |
Non-concessional contributions cap for the first year |
Bring-forward period |
|---|---|---|
| Less than $1.66 million | $360,000 | 3 years |
| $1.66 million to less than $1.78 million | $260,000 | 2 years |
| $1.78 million to less than $1.9 million | $120,000 | No bring-forward period, general non-concessional contributions cap applies |
| $1.9million or more | Nil | Not applicable |
These topics can be complex, so it’s always good to talk to a financial expert for help and guidance on what you could do.
Seeing a financial planner ensures you aren’t missing any smart ways to make the most of your money. They can also help you feel confident and optimistic about your future.
To make a booking with a financial planner call 1300 192 602 or visit aware.com.au/advice
