Ways to boost your Super

 
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Ways to boost your Super

Whilst the news headlines are all about how you can access your superannuation money early, it seems timely to encourage ways to boost your superannuation.

Whether you have needed to access your super early or not, understanding the various ways to boost your super is an important first step in making future decisions to grow your retirement kitty.

Superannuation contribution strategies include:

Salary sacrificing

Salary sacrificing is where you agree to give up part of your future salary in return for your employer paying this as a pre-tax contribution to your super. You can grow your super and may also reduce your tax at the same time.

Government co-contributions

If you make personal after-tax contributions to your super and you satisfy certain eligibility criteria you may receive a government co-contribution of up to $500. To be eligible to receive a government co-contribution for a particular financial year you must:

  • make at least one personal after-tax contribution to super in the financial year.

  • be under age 71 on 30 June of the financial year – have total income of less than $53,564 for 2019/20 and $54,837 for 2020/21.

  • have a total superannuation balance of less than $1.6 million (subject to indexation) at 30 June of the previous financial year, and

  • not have exceeded your non-concessional contributions cap for the financial year.

Other eligibility conditions apply. For further details visit ato.gov.au.

Spouse contributions

If your spouse makes a contribution to your super they may be entitled to receive a tax offset of up to $540. Your spouse will not be entitled to a tax offset if you have exceeded your non-concessional contributions cap for the financial year in which the contribution is made or if your total superannuation balance exceeds $1.6 million at the 30 June prior to the financial year in which the contribution is made.

For further details, including eligibility criteria, visit ato.gov.au.

Government low-income superannuation tax offset

If your adjusted taxable income is less than $37,000, you may be eligible to receive a government super contribution of up to $500. This payment is known as the Low Income Superannuation Tax Offset (LISTO).

For further details, including eligibility criteria, visit ato.gov.au.

Contribution splitting

You may, under certain circumstances, be able to split to your spouse’s super up to 85% of your annual employer contributions and member contributions for which you claimed a tax deduction.

Downsizer contributions

If you are age 65 or over and satisfy eligibility requirements, you may be able to make a downsizer contribution to super of up to $300,000 from the proceeds of selling a home owned by you or your spouse for at least 10 years.

You are able to make a downsizer contribution even if you are not working. You can also still make a downsizer contribution if your total superannuation balance is greater than $1.6 million (subject to indexation). The contribution will not count towards your contributions caps.

Your downsizer contribution will, however, be included in your total superannuation balance when it is re-calculated at the end of the financial year and it will count towards your transfer balance cap ($1.6 million for 2019/20 and 2020/21). You can only make a downsizer contribution for the sale of one home. Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the Age Pension.

The information which is summarised herein does not constitute financial or other professional advice and is general in nature. It does not take into account your specific circumstances and should not be acted on without full understanding of your current situation and future goals and objectives by a fully qualified financial advisor. In doing so you risk making commitment to a product and/or strategy that may not be suitable to your needs.

 
 
Hills Financial