|First published: 5 June 2020|
It’s almost the end of the financial year. This is a good time to review your superannuation and see if you are entitled to any tax savings on your contributions.
Everyone’s tax is different. Depending on your salary level, the Government offers tax benefits on superannuation contributions. This article looks at some of the options that may be available to you.
If your income is more than $37,000, salary sacrifice can be a tax-effective way to grow your superannuation.
Salary sacrifice is when you and your employer agree to make an additional contribution to your superannuation from your before-tax pay. This is known as a concessional contribution and is taxed at 15% when it enters your superannuation. For most people, this is lower than the marginal tax rate on their income. You benefit because you pay less tax while you grow your retirement savings.
If you are interested in setting up a salary sacrifice, talk to the HR or payroll team at your workplace.
Remember, there is a concessional contributions cap for the financial year of $25,000. If your total superannuation balance is less than $500,000, you may be able to carry forward unused cap amounts for up to five years. To find out how much of your cap is left for this financial year, log in to your account or call us on 1800 444 396.
Tax deductions on personal contributions
If you make extra contributions from your after-tax pay, you may be entitled to a tax deduction. By growing your superannuation further with personal payments, you could get a tax deduction now and have more money to enjoy in retirement.
Further information is available in our tax deduction for personal contributions fact sheet.
If you are thinking of claiming any contributions as a tax deduction, you will need to complete a Notice of intent to claim or vary a deduction for personal contributions.
We recommend you speak to your accountant or financial adviser if you are unsure of the potential implications of claiming a tax deduction.
For 2019/20, if your annual income is less than $53,564, the Australian Government will contribute 50 cents for every dollar you put into superannuation from your after-tax pay (non-concessional contributions) up to a maximum of $500.
Information about eligibility and how to apply for a government co-contribution can be found on the Australian Taxation Office (ATO) website.
Low income super tax offset
The Government provides further assistance if you are on a lower income. For 2019/20, you may be eligible for a low income super tax offset (LISTO) if you earn less than $37,000. The LISTO is calculated on 15% of your before-tax (concessional) contributions that you or your employer pays into your superannuation. The maximum payment you can receive for a financial year is $500, and the minimum is $10.
This offset is usually paid directly into your superannuation fund. You don’t need to do anything to receive this offset, although you will need to make sure your superannuation fund has your tax file number.
Further information about LISTO is available on the ATO website.
Tax offsets for spouse contributions
Spouse contributions are a good way to grow your partner’s superannuation so you can both enjoy a better lifestyle in retirement.
You could also receive a tax offset if your partner earns between $37,000 and $40,000 each year.
A contributing spouse can claim a maximum tax offset of 18% of the first $3,000 of contributions made on behalf of the receiving spouse. This $3,000 maximum is reduced by $1 for every dollar of income over $37,000 – which is why this offset cuts out at $40,000.
Further information is available on the ATO website.
How to make an additional contribution
To top up your superannuation before the financial year ends, you can make additional contributions or a one-off payment before 30 June. You can use BPAY to make additional contributions from your bank account into your superannuation.
To make a BPAY payment, you will need your unique reference number and LGIAsuper's BPAY biller code. To access this information, log in to your account and find the option for additional contributions.
If you do not have access to the internet, you can call us on 1800 444 396 for these details.
Our financial advice service could help you discover ways to grow your superannuation and save on tax.
Booking an appointment with one of our financial advisers could help you to create a plan that helps you work towards your financial and lifestyle goals.
Whatever your stage in life, we offer different types of advice services that can help you. Call us on 1800 444 396 to discuss an option that suits you best.
This article has been produced by LGIAsuper Trustee (ABN 94 085 088 484, AFS Licence No. 230511) ATF LGIAsuper (ABN 23 053 121 564) and may contain general advice, which has been prepared without taking into account your objectives, financial situation or needs. As such, you should consider the appropriateness of the advice to your objectives, financial situation and needs before acting on the advice. You should also obtain and consider the Product Disclosure Statement (PDS) for your account before making any decision to acquire or contribute additional amounts to your LGIAsuper account – available to download at https://lgiasuper.com.au/pds or call us on 1800 444 396 to request a copy. This email contains information that is up to date at the time of publishing. Some of the information may change following its release. Any questions can be referred to LGIAsuper by calling us on 1800 444 396 or by emailing us at email@example.com
LGIAsuper has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514 to facilitate the provision of financial advice to members of LGIAsuper. LGIAsuper Financial Advisers are Authorised Representatives of IFS.