End-of-year superannuation checklist

As the end of financial year approaches, it pays to start thinking about whether or not you will be able to make any additional personal contributions to your super.

In addition to topping up your retirement nest egg, you will also benefit from some generous tax breaks.

Recently, there has been a lot of discussion surrounding the future of these tax concessions so if your financial situation is permitting, it might be worth considering maximising your contributions as soon as possible.

Super for the self-employed

Self-employed Australians can make contributions to their superannuation and claim a full tax deduction.

These contributions are considered to be part of your concessional contributions cap (tip: deductible superannuation contributions can offset an unusually large taxable income, for example, if you have made a significant capital gain from the disposal of an asset).

Set up a salary sacrificing arrangement

In a salary sacrificing arrangement, your employer will hold back part of your gross (before tax) pay and contribute it to your nominated superannuation account.

The contributions to your super account are taxed at the flat rate of 15%, which is typically much lower than your marginal tax rate. Salary sacrificing into your super reduces your total taxable income, thereby reducing your tax bill.

Super contributions for your spouse

If you have a spouse who is a low-income earner (as is often the case when one party has taken time out from the workforce to raise a family) then making superannuation contributions on their behalf is a great way to reduce your tax bill.

As an added benefit, their superannuation savings won’t suffer from their contributions break, and the money will work hard due to compound interest and low tax rates.

Having savings in two different superannuation accounts can also increase your options and financial flexibility in retirement.

It is important to monitor your contributions caps to make sure that you do not exceed the maximum amounts allowed. Super contributions exceeding the caps will be taxed at the top marginal tax rate.

End-of-financial year superannuation tax checklist:

  1. Do I have the necessary records for all of my superannuation contributions and accounts?
  2. What is the total amount that I have contributed this year (including my super guarantee amounts)?
  3. Can I make a contribution for my spouse? And is this an effective tax minimisation strategy?
  4. Were there any contributions from the previous financial year that I can super split into this current financial year?
  5. Should I consider making any additional contributions before the end of financial year (concessional and non-concessional)?