C & W Partners Chartered Accountants

30 June Strategies


1. Maximise concessional contributions to superannuation.

Contributing money into superannuation by making salary sacrifice contributions can be an effective way to increase the amount saved each year for retirement. For self employed persons, this can be done by making personal deductible contributions. These contributions are concessional contributions and are taxed at 15% rather than at the individual tax rates. The less paid in tax, the more invested for retirement. As an annual per person cap applies, it is important care is taken to ensure the concessional contribution cap is not breached.

2. Make a non-concessional contribution to superannuation to qualify for the Government Co-contribution of up to $1,000.

Making non-concessional contributions to superannuation may entitle the contributor to a matching Government contribution up to $1,000. Where an eligible person's total income exceeds $61,920, they are above the upper threshold for which a government contribution can be made. 
As limits apply to the amount that can be contributed to superannuation it is important to note the amount a person contributes will count towards their non-concessional contribution cap however the amount the Government contributes does not.

3. Contribute to a spouse's superannuation fund to qualify for a tax rebate of up to $540.

Contributing money into a spouse's superannuation account can help reduce the difference between a couple's retirement savings but can also provide a tax rebate of up to 18% on the amount contributed (maximum $540) for the contributor.  The tax rebate applies where the spouse has total income under $13,800, which includes non-working spouses. Any amount contributed on their behalf is counted towards their Non-Concessional Contribution cap so it's important any contribution is first assessed against their cap to ensure it will not be exceeded.

4. Defer taxable income until next financial year where income tax rates are lower.

From 1 July 2010, the upper threshold for the 15% tax rate is being extended by $2,000 to $37,000, the tax rate for income between $80,000 to $180,000 is being reduced by 1% to 37% and the Low Income Tax Offset will be increased to $1,500. Where possible, with lower tax rates applying from 1 July 2010, deferring any additional assessable income (including the realisation of capital gains) may be best left until next year financial year.

5. Pay the remainder of this year's income protection premium to help reduce net costs.

Where income protection insurance is held outside of superannuation,insurance premiums are generally tax deductible. Where possible,converting an income protection policy from a monthly deduction to an annual one will bring forward the remainder of the policy year's premium into the current year. With higher tax rates applicable for this financial year, a greater deduction may be available.

6. Look at pre-paying deductible expenses to help maximise the benefits form this years marginal tax rates.

With lower income tax rates applying from 1 July 2010, bringing forward deductible expenses or prepaying any deductible interest costs this financial year can help to maximise any allowable deduction.

7. Commence an Income Stream in June.

Where superannuation money is used to purchase an income stream in June, no pension payment is required that financial year and any investment earnings start to benefit from the tax-free pension environment.
In addition, where a client is turning age 60 in the next financial year, starting an income stream in June will enable them to defer their pension payment until they turn age 60 when it will be tax-free.

8. Re-start your Transition to Retirement (TTR) pension before 30 June.

Where salary sacrificing has been part of a client's TTR strategy,combining the amount salary sacrificed during the year and re-starting the TTR pension will help to maximise the amount that can be withdrawn in the next year. This may in turn allow more to be salary sacrificed to superannuation next year without impacting the client's take home pay.
It is important that care is taken to ensure that the concessional contribution cap is not breached.

9. Maximising Non-Concessional contributions each financial year.

When a non-concessional amount is contributed to superannuation,future investment earnings are taxed at a maximum rate of 15%. Each financial year a person can contribute up to the non-concessional contribution cap,currently $150,000. For those under age 65 as at 1 July,they can contribute up to $450,000 in that year and not breach the cap, by utilising the bring-forward rule.
In cases where a client is aged 65 but was under 65 at 1 July 2009, if they have met the work test this year then they are able to contribute up to $450,000 in non-concessional contributions without breaching their contribution cap.

10. Review investments before 30 June.

Regularly rebalancing a client's investment portfolio helps to ensure that the client's investment portfolio remains within their risk profile. As an additional benefit, any losses from assets sold may provide the added benefit of being able to be used to offset any gains made or received during the year. It is important that the rationale for the restructure is for investment purposes and not solely for the tax benefit.