Are you ready for the 30th of June 2021?

Contributions to Superannuation

Superannuation does impose restrictions on access to your money as it is intended to provide for your retirement. So why would you lock up more of your money? Because superannuation remains one of the most tax-favoured environments to build wealth with a maximum tax rate 15%. Not only will contributing to super help to boost your retirement savings, you could also be reducing tax payable on your income, helping to cover some of your insurance premium costs and getting a bonus top-up payment from the government.

Considering the immediate tax incentives of contributing to super and the ability to access the funds tax-free after age 60 and long-term investments rates of return typically being higher than mortgage rates it’s a good idea to consider contributing more to super. We have listed a few different options below to discuss with your adviser-

Concessional Contributions (Pre-Tax)

You no longer need to be self-employed to claim your contributions as a tax deduction (up to certain limits) –

• Spouse Contributions – Making a spouse contribution may entitle you to a tax offset of up to $540 (depending on your spouse’s income and age).
• Salary Sacrifice – Setting up a Salary Sacrifice arrangement with your employer can help boost your retirement savings throughout the year at the same time as reducing tax payable on your income.
• Catch-up Concessional Contributions – ‘Catch-up’ contributions aim to give people the same opportunity to save for retirement. You may be able to take advantage of catch-ups if you haven’t used your entire pre-tax (concessional) contribution cap since the 2018-19 financial year, by contributing the remainder in future financial years (subject to super balance requirements).

Personal Contributions (After-Tax)

• Government Co-Contributions – Making a personal contribution not only boosts your tax-free savings for retirement, you may be eligible for the government co-contribution of up to $500 (depending on your income)
• Lump sum After Tax Contribution – If you are nearing retirement, there may be advantages of boosting your super to create a tax-free income stream. You may be eligible to bring forward 3 years of after-tax contributions (subject to age and super balance requirements).

Income Protection Insurance

Income Protection insurance pays out up to 75% of your pre-tax income for a specified period that you are unable to work due to partial or total disability. If you already or even if you are currently not covered you may consider taking out a policy and may want to pay your annual premiums up front to obtain the tax benefits in the current Financial Year. Several changes coming in to place in October 2021 so the time to review income protection is now.

Pensioners considering Gifting

Are you considering to provide financial assistance to your family members?

Each Financial Year you are able to gift $10,000 to family members, but being so close to the end of the Financial year this gives you the opportunity to gift up to $20,000 in a short space of time (for example $10,000 in June 2021 and $10,000 in July 2021). These amounts are unable to be carried over and are only valid for the Financial Year and may help to increase your Age pension entitlement.

Transition to Retirement Pensions

If you're aged 58 to 65 and still working, you may be able to use a Transition to Retirement (TTR) strategy through your superannuation to help supplement your income if you reduce your work hours, or boost your superannuation balance and save on tax while you keep working full time.

Temporary reduction in pension minimums ending soon

In early 2020, the Government temporarily reduced the minimum drawdown amounts for account-based pensions for the 2019-20 and 2020-21 financial years in response to COVID-19's impact on investment markets. This temporary measure ends on 30 June 2021.

From 1 July 2021, the Government's default minimum drawdown amounts for the 2021-22 financial year apply to all account-based pensions, with no reductions. If you hold an existing pension within your superannuation fund, you can discuss with your adviser if your payment amount may increase automatically or stay the same. This will depend on what your default minimum drawdown amount is for the 2021-22 financial year.

To discuss any of the above options, please contact to arrange a meeting with one of our Financial Planners on 1300 204 781.