End of Financial Year Strategies 2016



Make the most of your super contributions

The two main types of contributions that have a cap are:Jetty

  • Concessional (before-tax) contributions – these are generally made to a super fund by your employer, or if you’re self-employed, those made by you for which you claim a tax deduction. Examples include Superannuation Guarantee (SG) contributions, salary sacrifice amounts, and any amount allowed as a personal deduction in your income tax return.
  • Non-concessional (after-tax) contributions – these are personal super contributions which you or your spouse makes for you with after-tax income.

The following table shows the caps that currently apply to both concessional and non-concessional contributions. It also details the extra tax that would apply to any amounts that exceed the cap.


Concessional contributions

(before-tax contributions)

Non-concessional contributions

(after-tax contributions)

Maximum contributions allowed (2015/16)

$30,000 cap

$35,000 for those aged 50 and over

$180,000 cap

Tax on amounts over the cap

Included in your income in the year of contribution and taxed at your marginal tax rate (0%-49%) plus an interest charge


Important Information from 2016 BudgetThe Government is proposing to reduce the concessional cap to $25,000 for all individuals regardless of your age meaning that the higher concessional cap will no longer be available. In addition, if you do not fully utilise your concessional contributions cap from the 2017/18 financial year onwards, you will be able to use utilise the unused portion of the cap to make catch-up concessional contributions. This ability will be limited to those with superannuation balances of less than $500,000, and the unused portion of the cap can only be carried forward for a maximum of five years.The Government has announced that it will introduce a lifetime cap of $500,000 on the amount of non-concessional contributions that can be made into superannuation. If legislated, the lifetime non-concessional contribution cap will replace the existing annual caps which allow annual non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals under age 65).  This limit will be backdated to count non-concessional contributions made on or after 1 July 2007.

What does it mean for you?

There are two key reasons why you need to know exactly what these amounts are:

  • If you haven’t reached your cap, there’s an opportunity to boost your super and reduce your taxable income this financial year.
  • If you have reached your cap, you may be subject to penalty tax on any excess super contributions you make before 30 June as per the table above.


Get a super top up from the Government

Govt Cocontribution

The Government co-contribution is an initiative to help eligible low to middle income earners boost their retirement savings. If your total income1 is less than $34,454 p.a. and you make personal (i.e. after-tax) contributions to your super any time this financial year, the Government will match your contributions on a $0.50 per dollar basis up to $500. If your total income is less than $50,454 p.a. the Government’s matching rate will be reduced as per the table below.Govt Cocontribution table

Assuming you qualify, the Government will automatically match and forward the co-contribution to your super fund once you’ve:

  • made an after-tax contribution, and
  • submitted a tax return for the financial year in which you’ve made your contribution.

What does it mean for you?

The Government co-contribution is an easy and cost-effective way to boost your retirement savings using some of your own money, and some of the Government’s money.

The potential downside is that you won’t be able to access your retirement savings until you’re eligible to access your super, which for most people will be at retirement age.


Boost your spouses’ super and reduce your tax

If your spouse doesn’t work or earns less than $13,800, you may be able to make contributions into their super account and claim a tax offset.

This contribution is a non-concessional contribution and will form part of the tax-free component of your spouse’s super account. You may receive an 18% tax offset when you contribute to your spouse’s super fund (see below for conditions). The offset only applies to the first $3,000 of your contributions in a year, with a maximum offset of $540.

What does it mean for you?

Spouse contributions can be an effective way to increase your spouse’s super. As this is a tax offset rather than a tax deduction, you may receive a direct saving against your income tax liability. Using spouse contributions and other available strategies means couples can enjoy more benefits when they save together.


Get more from your salary or bonus

Use salary sacrifice to boost your super and reduce tax.header_cocontribution_topup_right

 If you’re an employee, you can often enter into a salary sacrifice arrangement with your employer whereby you choose to give up or ‘sacrifice’ part of your before-tax salary and add it directly to your super account.

What does it mean for you?

If your marginal tax rate is more than 15%, salary sacrificing into super will reduce the tax you pay and help give your retirement savings a valuable boost. This is because salary sacrifice contributions within your concessional contributions cap are taxed at a flat 15% rather than your marginal tax rate.

However, you should remember that you generally can’t access your super money until you reach your preservation age (currently age 60) and you are permanently retired from the workforce.

If you wish to discuss further on how these strategies may benefit you before the end of this financial year, please contact Michael Phillips for a consultation on how to maximise your financial standing. Please call 02 9955 7131 or email info@phillipsfinancial.com.au.SUPERANNUATION-GUARANTEE-FOR-EMPLOYEES

This information was prepared by Phillips Financial, AFSL 223328 and is current as at May 2016. This publication provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The information in this publication does not take into account your objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it and obtain financial advice. Any taxation position described in this publication is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. The rules associated with the super and tax regimes are complex and subject to change and the opportunities and effects will differ depending on your personal circumstances.