If you’ve contemplated topping up your super, now is the time to do it, particularly if you’re self-employed or a contractor with irregular income. Why? Because with tax time fast approaching, you can lower your taxable income, which may reduce your tax bill or increase your tax refund. Secondly, earnings inside your super fund are taxed at 15%. This is generally significantly lower than the marginal tax rate.
Who should be topping up their superannuation
For many Australians, superannuation is one of the biggest financial growth tools and a critical lever in our wealth strategy. Adding to superannuation does provide tax advantages for this coming tax year, but it is advised to ensure it is the right strategy for your circumstances. We recommend speaking with us before proceeding. However, if you fit into the following, making additional contributions before June 30th this year can be advantageous:
- Have extra income or savings for this financial year.
- Are close to retirement and need to maximise your tax benefit
- If you have not made use of the concessional cap in the past financial year
- If you are below the concessional or non-concessional cap
There are conditions such as age limits, caps and eligibility rules if you are over 67 or are nearing $1.9M is your total superannuation balance.
It is important to note that any additional contributions must be cleared into your superannuation account no later than June 30th.
Why is it important to speak with your financial advisor first
Before making any decision regarding your superannuation, it is important to speak with us first. While the idea of topping up your super is sound, the rules and tax implications can be puzzling, and knowing how it may impact your current financial position is essential before committing.
Speaking with us will help untangle your financial circumstances, including income, current superannuation position, and your existing financial strategy to ensure any decision is worth the tax benefits and suits your long term outcomes. We will ensure your eligibility and help calculate how much unused cap scope is available, whether you can take advantage of any Government co-contributions, and ensure you will not be penalised by the potential DIV296 tax.
The June 30 deadline is approaching quickly, so you must act strategically. Qualified advice is your best asset in this regard.
We can help
Step Up Financial Group, now AFPG, is a team of qualified financial specialists. Every year, we help hundreds of Australians create financial stability and resilience while building toward a confident retirement.
Contact us today for experienced, compassionate, and professional financial planning advice.