Superannuation – 2021 Year End Tax Planning Series
As we move towards the end of the 2021 financial year, it is a good idea to start considering what tax planning strategies to put in place now to minimise your tax liability. In the third part of this eight-part series, we will outline a number of suggestions that may assist taxpayers to legitimately minimise or defer their taxation exposure in relation to superannuation.
Please note these suggestions are of a general nature only and should not be relied upon without seeking specific personal advice. With 30 June fast approaching, you need to act quickly, and we encourage you to contact our office on 1300 620 345 to schedule a meeting as soon as possible to assess your options and discuss the steps you need to take.
Personal Superannuation Contributions
The tax-deductible superannuation contribution limit or cap is $25,000 for all individuals regardless of their age. From 1 July 2018, members can make ‘carry-forward’ concessional super contributions if they have a total superannuation balance of less than $500,000. Members can access their unused concessional contributions caps on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire. The 2020/21 financial year is the second year in which you can access unused concessional contribution.
The advantage of making the maximum tax-deductible superannuation contribution before 30 June is that superannuation contributions are taxed at between 15% and 30%, compared to personal tax rates of between 32.5% and 45% (plus 2% Medicare levy) for an individual taxpayer earning over $45,000.
If you are already receiving a pension from your superannuation you will need to make sure you meet your minimum pension requirements before 30 June otherwise significant penalties could apply. The Government has allowed a 50% reduction on minimum pension standards this financial year to help pensioners manage retirement savings.