Archived May 2018 post. Superannuation caps, thresholds and rules have changed since; figures below reflect the 2017-18 year and are kept for reference only.
At the end of the financial year there were a number of strategies you could consider to reduce your individual tax liability. Superannuation is a complex, frequently changing topic, so these ideas should always be discussed with your adviser before acting.
Personal tax-deductible contributions
From 2017-18 the rules were relaxed so all eligible contributors could claim a tax deduction for personal contributions up to the $25,000 concessional cap – not just the substantially self-employed. This was timely for anyone who had made a considerable capital gain on property or shares, as a deductible contribution could help offset the assessable gain, reduce the marginal tax rate and boost the super balance for retirement. Contributions that couldn’t be claimed as a deduction were treated as after-tax (non-concessional) contributions.
Government co-contribution
For low-income earners (total income of $36,813 or less), an after-tax contribution attracted a government co-contribution of 50% – so a $1,000 after-tax contribution earned $500 from the Government. The maximum $500 co-contribution reduced by 3.33 cents for every dollar earned over $36,813 and cut out once total income reached $51,813.
Split super contributions with your spouse
Where there was an imbalance between spouses, it could be advantageous to split contributions (if your fund offered the feature). Up to 85% of the previous year’s taxable (concessional) contributions could be transferred to a spouse’s account. Reasons included potential tax advantages on withdrawal, accessing retirement money earlier, improving Age Pension outcomes, and equalising balances to keep both partners under the $1.6 million transfer balance cap.
Spouse contribution tax offset
If your spouse’s income was under $37,000, you could receive an 18% tax offset on the first $3,000 contributed to their super on their behalf – up to $540. The offset reduced on a sliding scale and phased out once their income exceeded $40,000.
A word on contributions caps
The 2017-18 caps were $25,000 for concessional contributions regardless of age, and $100,000 for non-concessional contributions (or $300,000 over three years under the bring-forward rule if under 65). The non-concessional cap reduced to nil once your total super balance was $1.6 million or more, and the bring-forward cap reduced once your balance reached $1.4 million or more.
Contribution eligibility
To make voluntary contributions you generally had to be under 65, or aged 65 to 74 and meet the work test (40 hours over 30 consecutive days in the financial year). Spouse contributions couldn’t be made where the receiving spouse was 70 or over, and voluntary contributions generally couldn’t be made once you reached 75.
General advice warning: This information is general advice only and does not take into account your individual circumstances, financial situation or needs. The figures and rules described reflect the law as it stood when the article was published and have since changed. Always seek current, personalised advice from a licensed adviser or registered tax agent before acting.