New super rules that took effect on 1 July this year have created new contribution opportunities to super.
Prior to 1 July 2017, if you earned more than 10% of your income from eligible employment, you could not make personal deductible super contributions (PDCs).
This ‘10% income test’ has now been removed and, as a result, it is possible to make PDCs regardless of your employment status.
PDCs are super contributions that are made personally (not by an employer) which can be claimed as a tax deduction to reduce your taxable income and income tax payable.
Like salary sacrifice, they are concessionally taxed in the super fund at a maximum rate of 15% (or 30% if your income from certain sources is over $250,000 in FY2017/18).
A tax offset of up to $540 is available if you contribute to your spouse’s super account and they earn less than $40,000 pa. (previously $13,800 pa).
It may therefore be worthwhile re-considering spouse super contributions if your spouse is a lower income earner.
From 1 July 2018, if you don’t use up the entire annual concessional contribution cap (currently $25,000) you will be able to accrue the unused amounts for use in subsequent years.
Unused amounts can be carried forward on a five year rolling basis. 2019/20 is the first financial year it will be possible to use the carried forward amounts.
To be eligible, your super balance cannot exceed $500,000 on 30 June of the previous financial year.
If eligible, this new opportunity will help those unable to utilise the concessional contribution cap due to broken work patterns and competing financial commitments.
It could also help to manage tax and get more money into super when selling assets that result in a capital gain.
Your adviser can help you decide on the strategies that work best for you – so get in touch with them and make an appointment to discuss your needs and situation.
