3 ways Australian women can boost their super before the end of the financial year

3 ways Australian women can boost their super before the end of the financial year

By Bianca Hartge-Hazelman | 15 May 2019

The lead-up to 30 June is a good time to make the most of your super contributions.

The end of the financial year is approaching and for many Australian women it’s an opportune time to make the most of a number of strategies to help boost their superannuation savings.

But before we delve into those tax-effective strategies, it’s wise to catch up on some basic super housekeeping before 30 June.

  1. Log into your super account and check your balance.
  2. Check what you’ve paid in fees this financial year.
  3. Check your investment returns for the financial year.
  4. Check your beneficiaries are up to date.
  5. Check your insurances are relevant.

It’s important to note that from 1 July 2019, key changes from the Protecting Your Super legislation will take effect and many inactive accounts with a balance of less than $6,000 will be closed, and the balance transferred to the Australian Tax Office. The ATO will then use data matching to connect these super accounts with an active account of the member where possible.

So it’s a good idea to check if you have any inactive funds, and decide whether you need to take action to transfer them where you want before 30 June.

You might also consider any insurance you have in a super account that you haven’t been contributing to.

Under the new legislation, insurance will be maintained on an opt-in basis for inactive accounts, which means if you don’t take action, you may have your insurance policy cancelled.

Now that’s been covered here are some tax-efficient ways you can use the EOFY to boost your super savings.

1. Claiming a personal tax deduction on extra concessional contributions

The average Australian working woman’s income is taxed at a much higher marginal tax rate than the 15% charged on superannuation contributions.

So, where you have surplus income or savings, and can afford to top up your super before 30 June, you could consider making a before-tax contribution. The total of your additional contributions and any employer contributions must not be more than $25,000 each year.

This is money that you will then be able to claim a tax deduction on, which means you could reduce your taxable income. Specific rules apply when claiming a tax deduction for your personal contribution, so check with your financial adviser or tax accountant.

From 1 July 2019, your concessional contribution cap may be higher than $25,000 if you’re eligible to take advantage of the ‘catch up’ rule.

From July last year, a new measure kicked in that allows for unused concessional super contributions cap amounts to be accumulated over five years, and can subsequently be used provided your total super balance is less than $500,000.

This measure could help women returning to the workforce after career breaks to have children, giving them the ability to catch up on super by making higher concessional contributions without breaching the annual cap.

2. Splitting concessional contributions with your spouse

This is a great tool that allows a spouse to top up their partner’s super balance, and is particularly relevant for women whose retirement savings have suffered due to career breaks.

This can be done at any age, but the partner must be either below preservation age, or aged between preservation age and 65 years and still working.

A person can only split their concessional contributions with their spouse.

These generally include employer contributions, including salary sacrifice, and personal contributions for which they claimed a tax deduction.

The amount available to be split is 85% of these concessional contributions (after allowing for 15% contributions tax).

The split concessional contributions only count towards the cap of the original contributor, not the cap of the person receiving the split contributions.

3. Claiming a tax offset on spouse contributions

This strategy is slightly different to super splitting, in that it allows a person, typically the main breadwinner in a relationship, to increase the super balance of a non-working or low-income earning spouse earning less than $40,000 per year.

Eligible Australians can claim an 18% tax offset up to a maximum of $540 in their personal tax return on non-concessional (after-tax) contributions of up to $3,000 to their spouse’s account.

Bianca Hartge-Hazelman is a columnist on women’s money matters and is the founding publisher of Financy and the Financy Women’s Index. This article represents the views of the author only and does not necessarily reflect the views of AMP.


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