With the end of the financial year fast approaching, it’s a good opportunity to have your super savings reviewed by a superannuation expert. A simple conversation today could help you build for a better lifestyle tomorrow – as well as keep a few 
more tax dollars in your pocket this financial year.
Over 55? More End of Financial Year strategies which could help you pay less tax, or save on fees
Whether you’re starting to make the transition to retirement or you’re already retired, there are plenty of ways you could maximise your benefits and minimise your tax before the end of the financial year.
But it could be a case of use it or lose it. Once 1 July dawns, you’ll lose the chance this financial year to take advantage of the annual limits on different kinds of super contributions.
Below we’ve outlined some opportunities that could help members over age 55 make the most of their super. However, because everyone’s situation is different, you should consider whether they are right for you. An AMP financial planner can help you decide whether the opportunities mentioned are suitable for your circumstances.
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Your situation |
Opportunities to consider |
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Still working and want to boost your super tax effectively |
A Transition to Retirement (TtR) strategy could help boost your super without reducing your take-home pay. This strategy involves increasing your salary sacrifice contributions, while supplementing your income with tax effective pension payments from your super. If you start a TtR strategy before 30 June, you can take full advantage of this financial year’s contribution limits. So how does this work in practice? Let's say you've reached 55, are self-employed and you're earning $60,000 a year. You have $200,000 in your super, and you chose to use the full amount to start a pension. Together with your pension income, you can make a pre-tax contribution of $24,380 a year to your super and still receive the same amount of money in your pocket. After a year, you would have boosted your super by $953. Add that up over 10 years and you can see the potential long-term advantages. |
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About to turn 65 and have a lump sum to invest? |
This is your last chance to bring forward two years of non-concessional (after-tax) contributions and contribute up to $450,000 to super in one financial year without going over the cap. This can be particularly effective for lump sums, like an inheritance or the sale of a property. Once you turn 65, you won’t be able to use the 'bring forward' rule. |
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Want to gift some money to the next generation? |
You are limited to gifting $10,000 in any financial year and $30,000 over a rolling five-year period without a detrimental effect on your age pension. Gifts include both money and assets, including where assets are sold for less than their market value |
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Want to maximise your age pension entitlements? |
You can deposit up to 85% of your concessional contributions into your younger spouse’s super fund. Because super is not counted under Centrelink's assets tests for people under the age pension age, this ‘contribution splitting’ can potentially enable the older partner to qualify for more social security benefits. And you’ll help grow your spouse’s super into the bargain. 1 |
…and it doesn’t stop there. It’s important to start planning for the next financial year.
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Your situation |
Opportunities to consider |
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Want to reduce your work hours |
You could supplement your income by drawing down on your super as a regular pension should you choose to reduce your work hours. Once you turn 60, the income you draw down from your super will be tax free. |
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Eligible for age pension and want to keep working? |
You may be able to work and receive the age pension under the Government’s Work Bonus incentive to remain in the workforce. Visit www.humanservices.gov.au/customer/services/centrelink/work-bonus for more information. |
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Not sure how you will fund your retirement? |
A retirement income product can generate a tax-effective income to help you fund your retirement, along with your age pension entitlements. The deeming rules 2 are being extended on 1 January 2015 to new superannuation account-based income streams. So if you’re thinking of taking out a retirement income product, it could be a good idea to act before the end of 2014. This means you may continue to be assessed under the existing and more favourable rules, you can potentially receive more income without affecting your age pension entitlements and potentially avoid losing access to the Commonwealth Seniors Health Card. |
Like to know more?
If you have questions about how to take full advantage of the Government’s super concessions before the end of financial year, call us today on 07 5447 7740.
1 You have until 30 June of each year to split contributions for the previous financial year. This means you have until 30 June 2014 to choose to split a contribution made in the 2012/13 financial year. You can also split contributions for the present financial year even if your entire benefit is to be rolled over, transferred or withdrawn.
2 Deeming is used to calculate income for pension, benefit and allowance payments. The deeming rules assume your financial assets are earning a certain amount of income, regardless of the income they actually earn. Deeming encourages you to earn more income from your investments and reduces the extent that your payments may vary.
(Source: http://www.humanservices.gov.au/customer/enablers/deeming)
