HFI Super Strategies can make a real difference

International investmentsIt’s a known fact. Australians on average are living longer. We commonly spend over twenty years in retirement and the need to accumulate savings while we are still working to fund this increasing retirement period has never been greater.

Luckily, there are still some super strategies available to help boost your retirement nest egg and the sooner you start the better.

But remember that when you are considering your superannuation options, there is a limit to how much you can contribute tax effectively. Confirming the best super strategy for your circumstances with one of HFI’s financial advisers is essential.

Government co-contribution still available

The Government co-contribution may not be quite as generous now as it was in previous years, however it is still an effective way to boost your super savings and should be a serious consideration for low income earners.

If eligible, the Government will contribute up to 50 cents for every $1 of personal after-tax contributions you make. The maximum co-contribution of $500 per year is available if your total income is less than $33,516. A reduced co-contribution may be available if your total income is under $48,516.

Other conditions apply including the need to receive some employment or business income and you must be less than 71 at the end of the financial year the contribution is made.

Spouse contributions to achieve a tax saving

Many people aren’t aware that you can make superannuation contributions on behalf of an eligible spouse. This super
strategy can be very effective where one member of a couple is paying tax and could utilise a tax offset while the other member of the couple earns little or no income and would greatly benefit from an injection into their super fund.

Spouse contributions can be tax effective under the spouse contribution rules, a tax offset of up to $540 may be available for the spouse who makes the contribution if certain conditions are met. One of the main conditions is that the receiving spouse must have total income less than $10,800 per year to get the full $540 tax offset and no offset is available if spouse income exceeds $13,800 per year.

Contribution splitting to make insurance more affordable

Contribution splitting is the situation where a member of a couple can transfer up to 85% of concessional (before tax) contributions made in a financial year to an eligible spouse. This strategy can assist couples where one member of the couple is on a high marginal tax rate and can take advantage of the generous tax concessions of making additional before tax contributions to super. These additional contributions can then be transferred to the spouse to fund insurance
cover and to boost savings for retirement.

Making extra super contributions now to split with your spouse may also be beneficial to help equalise the amount of super held by each member of a couple allowing both parties to access tax effective income streams and lump sums in retirement.

Self employed can claim a tax deduction

Salary sacrificing some of your before tax salary into superannuation is a well known super strategy to tax effectively increase an employee’s super balance. For the self-employed, this strategy can be achieved by claiming a tax deduction for your super contributions.

Tax deductible super contributions can be made by an “eligible” person that is generally a self employed person or someone earning less than 10% of their total income from an employer.

These tax deductible contributions are referred to as “concessional” contributions and limits apply to the amount that can be contributed tax effectively.

Source: ClearView Viewpoint Edition 1.