With the end of the 2022/22 financial year rapidly approaching, it’s time to get your financial affairs in order. This includes making extra superannuation contributions to trim your tax bill and supercharge your retirement savings.
But the clock is ticking fast, and you’ll need to consider the following actions ahead of 30 June to take advantage of superannuation to improve your end of financial year tax position.
Get your contributions in on time.
If you want to include your super contributions in the 2022/22 financial year, you’ll need to get them into your superfund before 30 June 2022. This deadline is essential if you plan to claim a tax deduction for the contributions in this tax year.
Also, depending on how you make your contributions, the final cut-off date may be even earlier.
Check your contribution limits.
There are annual caps on super contributions. For instance, you can make up to $27,500 in before-tax super contributions. Included under this cap are any Super Guarantee (SG) contributions made on your behalf by your boss, any salary sacrificing you may be doing yourself, and your voluntary before-tax contributions.
You can also make $110,0001 in non-concessional (after-tax) contributions each year.
In both instances, some rules may allow you to contribute more than these limits, and this is something your accountant can assist with, as there are tax penalties for exceeding these cap amounts.
Tax benefits of paying additional amounts.
Making additional super contributions and lodging a Notice of Intent (NOI) with your superannuation fund enables you to offset this amount against your annual taxable income2.
For example, if you were to salary sacrifice an additional $5,000 of before-tax super contributions into your super, this amount can be claimed as a tax deduction against your salary.
If you’re under 67, you may even be able to bring forward up to three years’ worth of after-tax contributions and grow your super by $330,000 in a single year3. Best of all, these after-tax contributions won’t be taxed within your RSA.
Make a spouse contribution.
Suppose your spouse or partner earns under $40,000 this financial year. You may be eligible to claim a tax offset if you make a superannuation contribution on their behalf into their super fund.
This contribution to a loved one’s super fund lets you claim an 18% tax offset on contributions up to $3,000 ($540) made on behalf of your spouse or partner.
To be entitled to the spouse contributions tax offset, you must be married or in a de facto relationship, while your spouse must be under age 67. If your partner is between 67 and 74, they must meet a work requirement test. Simply put, your spouse has worked at least 40 hours over 30 consecutive days during the financial year.
As with anything related to your super, seeking good advice is essential and well before 30 June 2022.
Head to the Tax Office website for details about ways to save tax using super or speak with your accountant or financial adviser for information tailored to your circumstances.
Don’t delay making extra contributions to your RSA.
Keen to contribute to your Defence Bank RSA before 30 June? Please don’t leave it too late.
The end of the financial year is a busy time for all of us. To ensure your contributions reach your RSA ahead of 30 June 2022, we recommend making the deposit at least a week before. So, set a calendar note for 23 June, and you’re good to go!
Important note: This information is of a general nature and is not intended to be relied on by you as advice in any particular matter. You should contact us at Defence Bank to discuss how this information may apply to your circumstances.