Looking to reduce your tax bill before EOFY? There is a range of superannuation strategies that you may be able to utilise.
Personal deductible contributions/salary sacrificing
By making personal deductible contributions or salary sacrificing into superannuation, you could reduce your tax liability as both contributions enable you to reduce your taxable income.
Whilst you can arrange to make personal deductible contributions yourself, to salary sacrifice you must make an arrangement with your employer to sacrifice part of your gross salary in return for your employer making a superannuation contribution of the same value.
Are both your own and your spouse’s superannuation accumulating at the same rate? If not, spouse contributions could boost your retirement savings as a couple.
If your spouse’s assessable income totals $37,000 or less, you could be eligible to reduce your tax by up to 18% on the first $3,000 you contribute. This means that not only will the lower income earner’s superannuation build at a faster rate; there is the additional benefit of reducing the tax liability of the high-income earner.
Spouse contribution splitting
If spouse contributions are not for you but you still wish for both partners’ retirement savings to accumulate at a similar rate, you can consider spouse contribution splitting.
Contribution splitting typically allows you to split up to 85% of your employer superannuation contributions and personal deductible contributions from the previous financial year with your spouse. You may only nominate to split your superannuation contributions once per year.
Not only do these strategies have the potential to reduce your tax bill now but can help to grow the retirement savings of you and/or your partner, making good financial sense.
As with any strategy, it is important to obtain professional advice specific to your circumstances before proceeding.
This article references material provided in the RI Advice Group Pty Ltd 2018 End of Financial Year toolkit.
Disclaimer: Newcastle Financial Planning Group* and its advisers are Authorised Representatives of RI Advice Group Pty Ltd, ABN 23 001 774 AFSL 238429. The information (including taxation) in this article does not consider your personal circumstances and is of a general nature only – unless otherwise stated. This information is our interpretation of the law and does not represent tax advice. You should not act on the information provided without first obtaining professional advice specific to your circumstances.