Make this New Year’s resolution one that creates a measurable difference in your life by taking some simple steps to boost your superannuation.
As chartered accountants and financial advisers, we are focussed on looking after your financial health. It helps if you are as familiar as you can be with your investments. The start of a new year is a great time to re-acquaint yourself with your superannuation and make sure everything is on track.
Now is the also a great time to start tax planning for self managed superannuation ahead of the ATO lodgement deadline.
There are several simple steps you can take to boost your fund’s eventual value. But first let’s do an update on annual contribution caps.
Concessional Contribution Caps
Concessional contributions are before-tax contributions taxed at a maximum of 15% (unless you earn over $300,000 a year). For many, this means these contributions will be taxed at a lower rate than their marginal income tax rate. Extra contributions from your salary can be tax-effective, but there is a limit.
If you were 49 or younger on June 30, 2015, your concessional limit for the 2015–16 financial year is $30,000. This includes all compulsory employer payments. If you were 49 or older on that date, your limit is $35,000.
Non-concessional, or after-tax payments, are capped at $180,000 for the 2015–2016 financial year. Those under 65 may bring forward two or more years of non-concessional payments, allowing a non-concessional limit of $540,000 in that year.
Boosting Your Super
Keeping these limits in mind, let’s explore superannuation boosting options.
- Make concessional contributions: Change your pay arrangements so that an amount, however small, from your regular salary is paid into superannuation. This can make a real difference to your final balance and may reduce income tax.
- Check investment options: Investigate how your super fund has invested your money. Is it too conservative or aggressive?
If you think it doesn’t fit your current risk profile, speak with your financial adviser.
- Calculate your fund’s fees: A superannuation fund’s management fees can make a big difference to your final balance. Check your fund’s fee levels and consider shopping around for a better deal.
- Seek government co-contributions: If your income is $35,454 or less, the government will pay, up to a maximum of $500 annually, 50 cents for every after-tax dollar you contribute. And if you earn up to $50,454 annually you may be eligible for a lesser contribution.
- Set a retirement date: No matter how far away retirement may be, you can only plan your financial future when you have set a date. Of course it will change, but it will allow you to figure out exactly how much needs to go into your superannuation in order to meet your lifestyle goal.
Make Your 2016 Resolution Now
We would be delighted to sit down with you and ensure your superannuation and finances are working hard for you.
It is also timely to commence tax returns for:
- Self managed superannuation funds
- Business accounts and companies
- Personal tax
At Moiler Partners, we look forward to helping make 2016 really super…