Deakin Business School financial planning experts Gurbinder Gill and Marc Olynyk offer their top seven tips for maximising your superannuation at tax time.
As the end of the 2022/23 financial year fast approaches, Deakin University experienced financial planners Gurbinder Gill and Marc Olynyk have shared their ‘Magnificent Seven’ tips for optimising your super.
“These tips are all important things I talk about with my clients come tax time, and it’s very important super fund members get their own personal financial advice to decide which options will work best for them and in what combination,” Mr Gill said.
“Superannuation represents the funds you will live off once you retire and the amount you accumulate will represent the difference between a comfortable lifestyle and much more modest existence which will only allow for the basics. Managing your superannuation is therefore important and there are several easy things that we can all do to better manage and grow our super balances,” Mr Olynyk explained.
1. Claim a tax deduction for contributions made to your superannuation fund.
Super fund members are allowed to make an annual contribution up to $27,500 in concessional (before-tax) super contributions for the 2022/23 financial year. Check with your super fund and if you haven’t reached the limit, you could make a contribution before the end of the financial year. This allows you to claim a valuable tax deduction and reduce your tax payable. But remember, these contributions are subject to a 15% tax rate when received by the super fund.
2. Boost your superannuation balance before retirement.
Members are also allowed to make up to $110,000 in voluntary non-concessional (after-tax) contributions to their super account for the 2022/23 financial year. While these contributions do not provide a tax-deduction, they are very useful for boosting your accumulated superannuation balance in a tax effective way, because earnings from a super fund are only taxed at a maximum rate of 15%.
3. Carry forward unused pre-tax contribution caps from previous years.
Members who haven’t used up their concessional contribution cap from previous years can carry these amounts forward for up to five years and claim them as a tax deduction. This would be useful if you are seeking to maximise your super balance and also have a large tax bill that you’re looking to reduce in the current financial year. The carry-forward provisions can be used as long as your super balance is less than $500,000.
4. Ensure that your super funds will go to your desired beneficiaries.
It’s important that you check with your super fund to ensure that you have a valid and current binding death benefit nomination in place. This will ensure that your super death benefits are paid to your preferred beneficiaries upon your death rather than allowing the trustee of your super fund to decide who should receive these funds.
5. Make a super contribution on behalf of your spouse.
Members can make an after-tax super contribution into their spouse’s super fund during the 2022/23 financial year and potentially claim up to $540 as a valuable tax offset against their tax payable for the current financial year. You must contribute at least $3000 and your spouse must not earn more than $37,000 per annum. As well as providing you with a valuable tax offset, it will boost the superannuation balance of your spouse.
6. Make voluntary after-tax contributions into your super fund during the year.
If you earn less than $57,016 for the current financial year and make at least a $1,000 non-concessional (after-tax) contribution to your super during the year, you may be eligible to receive a co-contribution of up to $500 from the government. This is a great way to boost your super balance and receive free money from the government.
7. Check your personal insurance cover in your super fund.
Many Australians have personal insurance cover for life, total and permanent disability, and income protection within their superannuation funds. Members need to regularly check their insurance cover to ensure it continues to meet their needs and provides appropriate protection for themselves and their family. Taking out personal insurance cover through your super fund has several benefits including the cost of the premiums often being cheaper; it preserves cash flow; and there is usually no need for medical checks, up to certain amounts of insurance cover.