Boost Your Super and Save on Tax Before 30 June

EOFY Advice: Boost Your Super and Save on Tax Before 30 June

It’s that time of the year again, the End of Financial Year (EOFY) is fast approaching.  This time of year presents an opportunity for you to take advantage of certain tax benefits which are available. These tax benefits will not only pay off now, but are an easy way to give a big boost to your retirement savings for the future. Over the next few days, we’ll be posting a short series of EOFY Advice articles to help explain some of the tax-saving and co-contribution benefits available to you.

A simple compound interest calculation (Money Smart Compound Interest Calculator) shows that an extra $500 a year (or $9.60 a week) would see an almost $100,000 boost to your retirement savings. When it comes to super small contributions made early and regularly can have a huge and lasting impact on your retirement savings!

All super contributions by your employer or via salary sacrifice arrangements are not tax-deductible. However, if you choose to make contributions to your Super after tax, you may be eligible to claim a tax deduction on your contribution.

How do tax-deductible super contributions work?

If you’ve come into a bit of extra money this financial year, making a voluntary contribution to your super may be a good strategy for some tax savings. By making a contribution to your super from your bank account, savings, an inheritance or from the from the sale of an asset, you may be able to claim the contribution as a tax deduction and reduce your assessable income when you file your tax return.

Voluntary super contributions are generally taxed in the fund at a rate of 15%1, instead of your marginal tax rate plus medicare levy which could be up to 47%.

If you’ve received extra money this financial year, putting that money into super and claiming it as a tax deduction could be a great tax saving strategy. Depending on your circumstances, this could give you a tax saving of up to 32% as well as increasing your super.

Similarly, if you’ve sold an asset which you have to pay capital gains tax on, you may consider contributing some or all of that money into super, so you can claim it as a tax deduction. This could reduce or even eliminate the capital gains tax on the sale of that asset.

1. There are caps on the concessional contributions you can make each financial year. If you go over the cap, you may have to pay extra tax. Refer to the ATO website for more information.

How do I claim a tax deduction on a super contribution?

To claim a  tax deduction on your voluntary after-tax super contributions, you will need to take the following actions.

1. Make an after-tax contribution to your super before 30 June
Keep in mind, that there is concessional contributions cap of $25,000 per year. This means you can only contribute up to $25,000 of employer contributions, salary sacrifice contributions and personally deductible contributions collectively to your super each year – or tax  penalties will apply2. If you think you may be close to this cap, please call our Member Care Team on 1300 360 907 email us at members@christiansuper.com.au

2. Lodge a notice of Intent Form with Christian Super 
You’ll need to lodge a Notice of Intent Form with us. This form from the Australian Taxation Office (ATO) allows you to claim or vary a tax deduction for personal super contributions. Simply complete the form, attach the necessary payment and send to Locked Bag 5073, Parramatta NSW 2124. If you’d like to make your contribution via BPAY, your BPAY details can be found online via MemberAccess.We will acknowledge the form and payment in writing.

3. Have your paperwork in order when you do your tax return
After 30 June, you can lodge your tax return using the written acknowledgement from Christian Super which confirms your intention to claim and the amount you can claim (that is, your contribution.) Note, you have until 31 October to lodge your tax return for the previous financial year, though you may have more time if you use a registered tax agent.

2. You can still make non-deductible personal contributions of up to $100,000 per year

A few things to be mindful of

If you are aged 65 or over you will need to meet a work test before making voluntary super contributions. This means you must have been gainfully employed during this financial year for at least 40 hours over a period of no more than 30 consecutive days.

If you are under the age of 18, you can only claim a tax deduction on a super contribution if you’ve earned income as an employee or a business operator during the year.

Please also note that personal tax-deductible contributions are not the only contributions that count toward the concessional contributions cap of $25,000 per year. Other contributions include:

  • Compulsory contributions paid by your employer under the Superannuation Guarantee
  • Contributions from any other jobs you may have held in the same financial year
  • Salary sacrifice contributions

Remember, our Member Care Team are always happy to help and are available 9am and 6pm Monday to Friday. You can call the team on 1300 360 907 or email us at members@christiansuper.com.au.

Disclaimer: The content of this article includes advice that is general in nature and does not consider your personal situation. Christian Super encourages all people considering their options in retirement planning to seek out qualified professionals who can provide specific personal advice.