Boost your super this financial year

The end of financial year is fast approaching, so now might be a good time to top up your super and help give your super balance a welcome boost. Here’s a guide to help you make the most out of your super before 30 June.

Super is real money and can be a tax effective way to fund your retirement. By the time you retire it will likely be one of your biggest assets, so putting some thought into making contributions today may help you achieve the lifestyle you want in retirement.

Give your balance a boost

Making additional contributions today could help boost your super balance in the future. Take Alex for example. She’s 40 years old and decides to contribute an extra $100 each month to her super, as a before-tax contribution. If she keeps it up, by the time she retires at age 67, it could mean an extra $32,276 in her super^.

And there are potential tax benefits as well:

  • Reduce your taxable income – if you make before-tax contributions from your salary or claim a tax deduction in your tax return for your personal super contributions, you'll lower your taxable income, which could mean paying less tax.
  • Pay less tax on investment earnings – earnings on your super are taxed at a maximum of 15%, whereas earnings on personal investments outside of super are taxed at your personal (marginal) income tax rate. This can be as high as 45%.

Read more about the different types, limits and benefits that could apply when making a super contribution.

^ Example is for illustrative purposes only and has not taken your individual circumstances into account. It assumes a 6.0% pa investment return in the balanced investment option in an average market until retirement at age 67. Investment return assumptions are reduced for annual investment management fee of 0.69% pa and a constant earnings tax rate of 15%.The example includes assumption of employer contribution rate of 9.5% pa (which increases over time in line with the law), a wage inflation rate of 3.5% pa and a discount for price inflation of 2.5% pa. See what you need to know section below for full assumptions and important information relating to this example.

Explore your options when it comes to the different
types of super contributions.

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Contribution caps

There is a cap per financial year ($25,000 for 2018-2019) on the amount of before-tax contributions you can make. This includes salary sacrifice and compulsory contributions made by your employer on your behalf, as well as personal contributions which you claim as a tax deduction in your tax return.

There’s a cap per financial year ($100,000 for 2018-2019) on the amount of after-tax contributions you can make. If you’re under age 65, you can also ‘bring forward’ up to 3 years’ worth of after-tax contributions, which means you could contribute up to $300,000 in a financial year. However, if your total superannuation balance at 30 June of the previous year was $1.6 million or more, your after-tax contribution limit will be reduced to zero.

How you could benefit

Personal after-tax super contributions made since 1 July 2018 can be claimed as a tax deduction when you’re doing your tax return. But make sure you understand the rules around timeframes and eligibility.

Because personal contributions to your super fund (which you claim a tax deduction on) will only be taxed at 15%, this produces broadly the same tax benefit offered by a salary sacrifice arrangement.

This is of benefit if your employer doesn’t offer you the option to salary sacrifice, or if you receive some money that you’d otherwise pay tax on at your full marginal tax rate.

To make a personal after-tax super contribution, firstly you’ll need to make a personal contribution to your super and then lodge what’s called a ‘Notice of intent' to claim or ‘vary a deduction for personal super contributions’ form with your super fund (within the permitted timeframes, as outlined in AMP’s Notice of intent form and also from the ATO).

Your super fund will acknowledge this in writing. Then following the end of the financial year and using the written acknowledgement from your super fund, you can prepare and lodge your tax return. If your Notice of Intent is submitted outside the ATO determined timeframe, the trustee will not be able to accept it and you will not be able to claim the deduction.

Did you know that contributing a little extra to your super today could help you out later down the track?

Super works based on the principle of compound interest – where you earn interest on your interest over time. This means that the more super you save early on, the more time you have to grow it.

Plus, if you add a little more to your super from your before-tax pay, you could end up paying less tax.

Find out how much more you could have in retirement, if you added a little extra to your super contributions.

If your spouse (husband, wife, or de facto) is a low to middle-income earner or not working, you might be eligible for a tax offset if you make after-tax contributions to their super.

To be entitled to this tax offset, eligibility rules apply, and the receiving spouse must be under the age of 65, or if they’re aged 65 to 69 they must meet work test requirements.

Generally, if you do make after-tax contributions to your spouse’s super fund, you can claim an 18% tax offset on up to $3,000 when completing your tax return at the end of the year. But the receiving spouse’s income must be $37,000 or less for you to qualify for the full tax offset and less than $40,000 for you to receive a partial tax offset.

On top of that, if you’re unable to make further after-tax contributions into your own super (for instance, you may have reached your own contributions cap), contributing into your spouse’s super may have benefits due to the favourable tax treatment that’s generally available through super.

Find out if you’re eligible and what tax benefits you may be able to access.

 

Things to consider

  • Any contributions into super are generally only accessible when you reach preservation age and retire. There are exceptions, such as under the First Home Super Saver Scheme.    
  • If you exceed the contribution cap limits, additional tax and penalties may apply.
  • Before-tax super contributions will typically be taxed at 15% upon entry to your super fund*.
  • The value of your investment in super can go up and down. Before making extra contributions, make sure you understand and are comfortable with any risks tied to your investment option. Find more information about super investment options.
  • There are different ways to boost to super. Find more information on the ways you can add to super
  • You should consider your own circumstances and decide what’s right for you.

How can I contribute?

There are different ways to help top-up your super. Please ensure you consider your circumstances before deciding what’s right for you.

  • You can generally make a personal contribution via BPAY® or cheque. Find your payment details in My AMP.
  • Speak to your employer about making before-tax contributions from your salary, also known as salary sacrifice.
  • You may want to consider making a spouse contribution to your partner’s super, if they are eligible to receive after-tax contributions.

How much super should you have?

A healthy super balance can be a key ingredient in being able to live the life we want in retirement. If you’ve been asking yourself – how much super should I have at my age? – read on to find out.

Read more

We’re here to help

If you have a question or want more information, give us a call on 131 267 or speak to your financial adviser. 

We can help you find an adviser near you.

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Important information

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What you need to know

^ This example is for illustrative purposes only and has not taken your individual circumstances into account. It is based on a 40 year old person contributing an additional $100 each month (before-tax) into their super account, assuming 6.0% pa investment return in the balanced investment option in an average market until retirement at age 67. Investment return assumptions are reduced for annual investment management fee of 0.69% pa and a constant earnings tax rate of 15%. The example includes assumption of employer contribution rate of 9.5% pa (which increases over time in line with the law), a wage inflation rate of 3.5% pa and a discount for price inflation of 2.5% pa. The example is displayed in today’s dollars. The example excludes other fees and charges, any applicable insurance premiums and fluctuations of your super investment returns. It does not consider your personal circumstances including your current lifestyle, financial commitments, needs and objectives, or whether you have made any contributions in excess of your concessional contribution caps. The results are for illustration and information purposes only. The example is based on the same assumptions and limitations as the My Super Simulator. The example is correct as at 1 May 2019 and should not be relied upon as a true representation of any actual superannuation contributions, retirement benefit or taxation.

* If you earn $250,000 or above pa, inclusive of super you will also be subject to division 293 tax, which could mean an additional 15% tax on some or all of your before-tax contributions.

Any advice on this page is general in nature and is provided by AMP Life Limited ABN 84 079 300 379, AFS Licence No. 233671 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice you should consider the appropriateness of this advice having regard to those matters and consider any relevant product disclosure statement before making any decision. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

AMP Life is part of the AMP Group and can be contacted on askamp@amp.com.au. If you decide to purchase or vary a financial product, AMP Life and/or other companies within the AMP Group will receive fees and other benefits, which will be a dollar amount or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.

Information on this page is current as at May 2019 and is subject to change.