INVESTING

What to do with your super before the June 30 deadline

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Don't neglect your superannuation this financial year, otherwise you will miss out on one of the few tax concessions available.

If you aren't under financial stress because of COVID-19 and can afford to top up your fund, you only have 12 days until June 30 to either maximise your superannuation, take advantage of the carry forward concession, receive the Government's co-contribution and other important tweaks.

With the average superannuation account balance at only $132,646, most Australians aren't on track to save enough to meet their retirement plans.

june 30 deadline for super

The earlier you start putting extra money aside, the more you will have in super.

The power of compounding means that the more often your interest is compounded the more money you make.

Remember that the money has to be in your superannuation fund by Tuesday, June 30, otherwise it won't be counted for this financial year. So it is best to put your final contributions in by at least by Thursday, June 25, to make the deadline, explains Andrew Yee, head of Self-Managed Superannuation at HLB Mann Judd in Sydney. "It always catches people out," he explains.

Here are the steps you can take to pump up your retirement nest egg in the next 12 days:

Maximise your contributions

It is not too late to take full advantage of the tax benefits and make any shortfall in your superannuation to reach the tax concession cap of $25,000 per annum. This includes the compulsory 9.5% superannuation guarantee from your employer. You can top this up to reach the cap and pay only 15% contributions tax on concessional contributions. You can also make non-concessional contributions of up to $100,000.

Salary sacrifice

You are running out of time to salary sacrifice into your superannuation. But it is worth asking your employer to put some of your pre-tax pay into your superannuation fund by Thursday, June 25, to make the deadline of being in your super fund by Tuesday, June 30.

Carry forward contributions

This is the first year you can access unused concessional contributions. Yee says not many people are aware of this new benefit.

Here is how it works: If you haven't contributed up to the contribution cap of $25,000 for 2018-2019, you are allowed to top up that short fall. Known as the carry forward contribution, it means that if, for example, you only put $10,000 into your superannuation fund for 2018-2019, you have $15,000 of unused concessional contributions cap amount that you could add to this year's $25,000 limit. This allows you to put $15,000 plus the $25,000 to reach $40,000. To qualify you cannot have more than $500,000 in your superannuation fund.

Not only can you boost your superannuation, but you can lower your tax rate for the year.

The carry forward contribution is ideal for people who have irregular work or for older people whose financial commitments such as paying down the mortgage or the school fees. Also if you have sold an asset such as an investment property, it allows you to lower your capital gains tax.

Government co-contribution of up to $500

If you're under age 71, engaged in employment and your total income is less than $53,564, the government will co-contribute 50 cents for every $1 of any non-concessional (undeducted) super contributions that you make, up to a maximum of $500. If you put in $1,000 and earn less than $38,564, you qualify for the full $500.

This may be a useful strategy for low income working spouses or adult children working part-time, explains Yee.

Self-employed contributions

Saving for retirement is painless for most Australians because their superannuation is automatically deducted from their pay by their employer. But for self-employed Australians, they must put their savings aside themselves and lodge some essential notices with their superannuation fund before the tax office allows them to qualify for a tax deduction.

But there are some important steps to take before you receive a tax deduction. The first is to make sure you qualify as self-employed. To meet the requirements for self-employed tax deductions up to the contribution's caps, you must earn 10% or less of your income from an employer.

You must also fill out a notice of intent form from your superannuation fund. There is also one available from the tax office online.

Your superannuation fund must give you an acknowledgment of their receipt of the notice before you lodge your tax return for the relevant year. Then you can claim a deduction in your tax return for the contributions you made. Keep the correspondence from the super fund as proof for the tax office.

Make a spouse super contribution

You may be entitled to an income tax offset of up to $540 for superannuation contributions for the benefit of a lower income (under $40,000) or non-working spouse who is under age 70, explains Yee.

The 18% tax offset on super contributions up to $3,000 that you make on behalf of your non-working or low-income-earning partner is worth $540. You can contribute more than $3,000, but you won't receive the spouse contribution tax offset on anything above $3,000.

Self-managed superannuation funds

Make sure your SMSF paperwork is up to date, says Yee. In particular valuations for unlisted assets such as property have to have been made in the last year and be reasonable, says Yee. It is particularly important if your SMSF is paying out a pension.

Draw your minimum pension before year end

If you are already drawing a superannuation pension, Yee says check that that your fund has paid you the minimum pension before June 30. For many retirees, the significant losses in financial markets as a result of COVID-19 have eaten into their superannuation savings and the Government has reduced the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities by 50% in the 2019-20 and the 2020-21 financial years. Check with the tax office for the new limits.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
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