Things to do Before the End of the Financial Year
Published on 10/05/2021
The end of the financial year is fast approaching – are you ready? These are the best ways to reduce your income tax and access government incentives to accelerate your super savings before 30 June.
Salary sacrifice is when you make ongoing contributions from your salary to your super account. When you choose to salary sacrifice before tax you reduce your taxable income, paying only 15% tax on the amount you choose to sacrifice rather than up to 47%*, leaving you with more money to invest and grow your super. You can talk to your employer to set up salary sacrifice.
If you earn up to $54,837 you may qualify for the government co-contribution. You can make a voluntary after-tax contribution to your super before 30 June and the government will co-contribute 50c for every dollar you contribute up to a maximum of $500. If you qualify, the co-contribution will automatically be paid into your super account.
If your spouse has a low income, you may be able to claim a tax offset of up to $540 if you contribute to their super account. For more info on the spouse tax offset visit the ATO website.
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Things to consider
• Compare your super fund's tax rate of 15% against your marginal tax rate. Check the ATO’s website for more information.
• Concessional and non-concessional caps.
• Seek financial advice if you need help deciding on the best way to contribute to your super based on your financial situation.
* The highest marginal tax rate is 45% plus 2% Medicare Levy. The marginal for taxable income less than $18,200 is Nil. Concessional contributions such as salary sacrifice are generally taxed at 15% when received by the fund, however a higher rate of tax may be payable on these contributions if your income and before-tax contributions are more than $250,000 in a financial year, or if you exceed your concessional contributions cap.
This page may include general advice but does not consider your individual objectives, financial situation, or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Prime Super is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.