The end of the financial year and your retirement

As we are approaching the end of the financial year, many people start thinking about their tax bill, superannuation and upcoming retirement and what strategies could be implemented now, before 30th of June 2023 and how we can improve not only the tax position but also retirement outcomes.

So today, we will go over various options available to you that you might consider implementing before the end of this financial year, especially if you are preparing for retirement.

1.     The most obvious strategy at the end of the financial year is checking your concessional contributions made for the year. What does that mean?

Concessional contributions consist of:

• Employer contributions
• Salary Sacrifice
• Any personal contributions for which you claim tax deductions.

Remember that the total limit for concessional contributions for the year is $27,500. Do not contribute any more, as you could be subject to penalties.

Each of those types of contributions have been explained in my article:

Employer Contributions are explained in “Concessional Contributions to super – what is SG?”

Salary sacrifices in “Salary Sacrifice – tips, traps and benefits”

Personal contributions in “4 reasons to make personal deductible super contributions”.

Extending on that is the possibility of what we call “catch-up contributions, or otherwise called carry forward contributions. See the full explanation in “Catch-up Carry-forward concessional contributions”.

If you have spare cash and are on a high income, it makes sense to use those unused contributions from 20218/19 financial year, as otherwise they will expire on 30 June 2023.

This is a very useful strategy if you sold an asset and now have a CGT liability, but in all honesty, get the full advice to do this correctly and benefit the most.

If you are unsure of what I am talking about or would like a full checkup if this is a beneficial strategy for you, just get full financial planning advise.

Just to finish off about the concessional contributions, please remember that from the new financial year, the SG contributions rise from 10.5% to 11%, so please make sure you speak with your payroll department about your salary sacrifice arrangements, so you don’t go over the limit of annual allowable contributions of $27,500.

If you run your own business, please also remember to pay the correct amount of super of 11% next financial year.

2.     The next type of super contribution worth considering is a spouse contribution.

I cannot believe that I have not done a video or an article about that. Obviously needs to be rectified, but in general terms if your spouse earned less than $37,000 you could contribute $3,000 and receive a tax offset of up to $540.00. It might not look like a huge benefit, but if performed each year, it all adds up to a growth of your spouse’s super and extra tax minimisation for you.

3.     Government co-contribution

This is one of the easiest, best, and most forgotten strategies of them all. We always want to gain a huge benefit and forget about those little ones that if implemented annual will add to your super balance quite significantly, especially if you are on low income, where each dollar counts.

Learn all about the government co-contribution form here: “EOFY – Zero risk – 50% capital return guaranteed”.

Here you are, three solid strategies that you could be useful before the end of the financial year, no matter what your income situation is.