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Personal super strategies for year end

With the end of financial year fast approaching, starting to prepare now will save time and headaches when the June 30 deadline arrives.

There are a few common financial planning strategies that may be appropriate for businesses and individuals looking to take control of their finances and plan for the future.

Concessional contributions. The contributions cap for concessional contributions for those aged over and under 50 is $25,000 for the 2012/2013 financial year.

Those which have exceeded this limit will face a penalty tax of 31.5%, in addition to the 15% tax payable on contribution.

The excess concessional contributions also count towards the non-concessional cap. For those aged 65 or over, they must first satisfy a work test in order to make super contributions.

Government co-contributions. There are government incentives in place for making after-tax contributions to super, with the government co-contribution scheme designed for low to middle income earners earning up to $46,920 (2012/2013).

For those who have made an after-tax contribution and are earning up to $31,920, the government will contribute up to a maximum of $500 tax-free into the super fund.

For example if the non-concessional contribution is $800 for someone earning up to $31,920, then the Government will contribute $400, representing an instant return of up to 50% on contributions.

The amount the government contributes decreases by 3.33c for every dollar above the $31,920 and cuts out at $46,920. It is exempt from being included as income in tax returns.

Spousal contributions. Making an after-tax contribution to a dependant spouses’ superannuation account can result in a tax offset, provided that the spouse is under 65, or up to 70, provided they are still working.

Those who contribute at least $3,000 to the spouses’ account are eligible for the full tax rebate of $540, as long as their spouses’ assessable income is less than $10,800 for the year. If less than $3,000 is contributed then the rebate will be equivalent to 18% of the contributions.

If the spouses’ income is higher than $10,800, the rebate de-creases until it is capped if the income exceeds $13,800 a year.


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