As the end of financial year is fast approaching, it pays to start thinking about how you can grow your superannuation while seeking some generous tax breaks.
Spouse contributions
The spouse super tax offset allows higher earning taxpayers who contribute super for their non-working or low income earning partners to be eligible for a tax offset. To be eligible for the maximum offset of $540 for the 2017/18 financial year, you must contribute to your spouse’s super fund (whether de facto or married) and your spouse’s income must be $37,000 or less. For income above $37,000, the tax offset will gradually reduce and completely phase out at $40,000.
Government co-contribution
Low to middle income earners can receive a government co-contribution of up to $500, provided they meet eligibility criteria. To receive a co-contribution you must have made one or more eligible personal super contributions during the financial year, be less than 71 year old at 30 June, not hold a temporary visa at any time during the financial year (unless you are a NZ citizen or it was a prescribed visa) and you must lodge your tax return for the relevant financial year.
Additionally, you must pass two income tests (income threshold and 10% eligible income test). If your total income is equal to or less than the lower threshold ($36,813 for 2017/18) and you make personal contributions of $1,000 to your super account, you will receive the $500 contribution. If your total income is between the lower threshold and the higher threshold ($51,813 for 2017/18), your maximum entitlement will reduce as your income rises.
Also, 10% or more of your total income must come from employment-related activities, carrying on a business, or both.
Contribution caps
Concessional (before-tax) contributions include employer contributions, salary sacrifice and personal contributions you claim as a personal super contribution deduction. The concessional contributions cap is $25,000 for everyone as of 1 July 2017.
The non-concessional (after-tax) contributions cap is $100,000 per year for the 2017/18 financial year and future financial years. Individuals aged between 65 and 74 years old can access this cap provided they meet the work test. If you have a total super balance greater than or equal to the general transfer balance cap at the end of 30 June of the previous financial year, your non-concessional cap is reduced to nil.
For more information about our superannuation services. Call us for a complimentary, obligation-free on how we can help you with your superannuation: (07) 3103 8551.