With end of financial year fast approaching we thought it timely to remind people of the key changes and concessions available in relation to superannuation.
1.Superannuation Guarantee – Increases to 11%
With effect from 1 July 2023 the superannuation guarantee rate increases from 10.5% to 11%, please check to ensure your payroll system will adjust to the new rate with effect from 1 July 2023.
2.Superannuation – Bring Forward Rules
With effect from 1 July 2019 superannuation fund members with a balance of less than $500,000 (on 30 June of the previous financial year) can make catch-up concessional contributions into their superannuation account. To use the catch-up rules, you must not have used all of your $27,500 concessional contributions cap in the previous year.
Under these rules you can carry forward up to 5 years of unused concessional contributions caps in the previous financial year. The 5 year carry forward period started on 1 July 2018 meaning that you may have significant catch-up contributions available.
Whilst most people may have other priorities this strategy may be particularly helpful in years when you have a one-off significant increase in income (e.g. capital gain, bonus) the catch-up contributions will reduce personal tax otherwise payable.
3.Government Co-Contributions
If you make an after-tax (non-deductible) contribution to your superannuation account up to $1,000 then the Federal Government will make up to a 50% co-contribution of $500 subject to you meeting the following criteria:
1.Total income for the 2022/23 financial year is less than $57,016 (note the maximum co-contribution of 50% applies to income levels less than $42,016 and reduces as your income levels increase);
2.You have lodged your income tax return for the 2023 financial year;
3.You are a permanent resident of Australia under 71 years of age; and
4.At least 10% of your income is from employment or business activities.
4.Spouse Contributions – Tax Offset
If you make a spouse contribution of $3,000 and your spouse earns less than $37,000 you may be entitled to a tax offset of $540.
In order to be eligible for the offset you must also:
a.Be Australian residents;
b.Spouse must be under 75 years of age;
c.You must not exceed the transfer balance cap limits of $1.7 million.
5.First Home Super Saver Scheme (FHSS)
The FHSS allows you to make voluntary concessional contributions into your super fund to save for your first home. You are able to contribute up to the existing superannuation concessional cap (currently $27,500) each year.
You can currently apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included in your eligible contributions to be released under the FHSS scheme, up to a total of $50,000 contributions across all years.
6.Contribution Splitting
Contribution splitting allows you to transfer concessional contributions from your superannuation account to your spouse’s superannuation account. You can split the lessor of
a.85% of your taxable splittable contributions made in a financial year.
b.your concessional contribution cap for the financial year ($27,500 for 2022/2023).
If you have a balance of less than $500,000 and make catch up concessional contributions (as noted above), the amount you can split may be higher.
To be eligible to split contribution with your spouse, your spouse is under:
c.65 and not retired, or
d.their preservation age regardless of their retirement status.
You must submit an application to split contributions to your superannuation fund in the financial year after the contributions were made.
If you have any concerns or questions about these superannuation strategies, please do not hesitate to contact us on (07) 3910 5675 or [email protected].