Superannuation

Smart super strategies: what you need to know

Superannuation can be one of the most tax effective ways to build your retirement nest egg. There are a range of strategies you can consider to boost your super savings.

Consolidate your super

If you’ve had several jobs since you started working, you may have money in more than one super fund. Having more than one super fund means you could be paying unnecessary fees and insurance premiums on each one. Combining all your super funds into one can make your super easier to track, simpler to manage and ensure you save on fees and charges.

Keep in mind, certain lost super accounts with balances of less than $6,000, as well as the balances of members not able to be identified by their fund, are automatically drawn together by the Australian Tax Office (ATO) to reduce your account fees. In addition, from 1 July 2013, the Government started paying interest linked to the Consumer Price Index (CPI) on all lost super accounts
reclaimed from the ATO - so your lost super savings will keep pace with inflation.

Track down your super

One way to find out where your super is located is by checking the statements you have received from each of your previous super funds or by calling your past employers. If you can’t trace your super, it may be classified as ‘lost’. Your super may be considered ‘lost’ if:

  • Your fund is not able to contact you and no rollovers or contributions have been made in the past year.
  • You’ve been a member for at least two years, you joined the fund by default via your employer and no contributions or rollovers have been made in the previous five years.

You can check whether any unclaimed or lost super belongs to you by visiting the myGov website (mygov.gov.au) or asking your current super fund to conduct a search on your behalf using a system called SuperMatch2. You might find a handy sum to boost your super!

Do some housekeeping and make sure your super fund has your tax file number (TFN). This will make it easier to find lost super, move your super between accounts and receive super payments from your employer or the Government as well as make personal contributions. Once you’ve tracked down all your super, you need to decide which super fund best suits your personal and financial circumstances. Before deciding on a fund, compare the costs and benefits of each.

There are four important things to consider before moving your super:

  • Will an exit fee be deducted from your investment?
  • Are there any investment and/or taxation implications?
  • Will you need to make new insurance arrangements? And will your new super account have adequate insurance coverage compared to your old account?
  • Will your current employer contribute to the chosen super fund?
Salary sacrifice

Currently, most employees receive super guarantee (SG) contributions from their employer of at least 9.5% of their salary. Adding to these contributions directly from your gross (pre-tax) salary can be an easy and tax-effective way to top up your super. This is called salary sacrifice.

Some of the benefits of salary sacrifice are:

  • It’s simple, automatic and consistent.
  • You do not pay income tax on salary sacrifice contributions to super (up to certain limits). Your super contributions are generally taxed at 15%, which may represent a significant tax saving, particularly if you are on the highest marginal tax rate of 45% plus applicable levies.
  • By making a salary sacrifice contribution, you can reduce your taxable income.
  • The difference in taxation may mean more money is available to invest in super than if you were to receive the money as after-tax income and then invest it.
  • Future earnings on contributions made to super are concessionally taxed at a maximum of 15%.

You should check with your employer first to see whether salary sacrifice arrangements are available and that adopting a salary sacrifice strategy will not reduce the amount of SG contributions your employer pays on your behalf.

Personal tax-deductible contributions

You can generally claim a full tax deduction for personal contributions you make to super. While still subject to the concessional contributions cap, this strategy may prove timely if you have made a considerable capital gain from the sale of a property or shares – as your deductible contribution to your super fund may help to offset your assessable capital gain. Not only could it reduce your marginal tax rate, it may also boost your super balance for retirement.

Personal tax-deductible contributions can also be a flexible way of maximising your concessional contributions near the end of a financial year.

Note that if you are not able to claim your super contributions as a tax deduction (for example, your income for the year is too low), they will be treated as after-tax (non-concessional) contributions.

To make a personal tax-deductible contribution, you need to submit a valid deduction notice to your super fund within strict timeframes, and have it acknowledged by your fund in writing.

Take advantage of the government co-contribution

To encourage you to save for your retirement, if your total income is $36,813 pa or less and you make a $1,000 after-tax contribution to super, the Government will generally contribute $500 to your super.

The co-contribution is calculated as 50% of your after tax contribution, but the maximum $500 government co-contribution also reduces by 3.33 cents for every dollar you earn over $36,813 pa and ceases once your total income reaches $51,813 pa.

When determining eligibility for the Government co-contribution, earnings that are salary sacrificed to super and reportable fringe benefits come under the definition of total income. If you fit within the income thresholds outlined above, and satisfy some other conditions, contributing to your super from your after-tax salary before the end of the financial year may be a great way to top up your super, and get an extra boost from the Government.

We can give you the latest updates and more information on this opportunity.

Split super contributions with your spouse

If you have a spouse, you are permitted to transfer certain super contributions from the previous financial year over to the super account of your partner. If the receiving spouse is over preservation age at the time of the split request, he or she must declare that they are not retired. Splits cannot be done once the receiving spouse turns 65. You can do this every year,
generally once the financial year has ended. Up to 85% of taxable (concessional) contributions such as SG, salary sacrifice and personal tax-deductible contributions made to super can be transferred.

There are several reasons for considering splitting super with your spouse:

  • There may be potential tax advantages to withdrawing the money from two super accounts rather than one (between preservation age and age 59).
  • Transferring contributions from the younger spouse to the older spouse could enable you to access more retirement money earlier.
  • Transferring money from the older spouse to the younger spouse could enable the older spouse to receive more Age Pension by delaying the date at which their super becomes an assessable asset.
  • Splitting superannuation monies does not count towards the receiving spouse's contributions cap.
  • To help equalise balances between you and your spouse. From 1 July 2017, a $1.6 million ‘transfer balance cap’ applies to limit the total amount of super savings you can use to commence retirement phase income streams (where earnings on assets are tax free).Because this cap applies on an individual basis, equalising super balances between members of a couple can ensure that both members stay below this cap.

Super splitting is not offered by all funds, so you will need to check whether your fund offers this feature.

The benefits of spouse contribution tax offsets

Another potential tax concession is a spouse contribution tax offset. This strategy may be available if you make after tax contributions directly to your spouse’s super account – these are known as eligible spouse contributions. To take advantage of this strategy, your spouse will need to be under age 65 or aged 65 to 69 and have satisfied a work test during the financial year. You can open a super account in your spouse’s name and make contributions to that account from your after-tax pay. You can also make these contributions to your spouse’s existing super account.

If your spouse’s assessable income, reportable employer super contributions and reportable fringe benefits are under $37,000 pa, you will receive an 18% tax offset on the first $3,000 you contribute on their behalf, up to $540 pa. The offset operates on a sliding scale and phases out to zero once their income exceeds $40,000 pa.

A word on contributions caps

When considering any super strategy, it’s important to assess how much you are contributing to super in any one year. The Government has set annual limits – known as contributions caps, and additional tax may apply where you exceed the caps.

The contributions caps for the 2017-18 financial year are:

  • A concessional contributions cap of $25,000 per financial year.
  • A non-concessional contributions cap of $100,000 per financial year, or $300,000 over a three-year period (known as the bring forward rule) if you are under age 65 any time during a financial year. In addition
    • Your non-concessional cap reduces to Nil once your total super balance (just before the start of the year) is $1.6 million or more.
    • The cap you have available under the bring forward rule will reduce once your total super balance (just before the start of the year) is $1.4 million or more.
    • If you triggered a bring forward rule in 2015-16 or 2016-17 (the bring forward cap was $540,000 at that time) but did not use all of your cap by 30 June 2017, transitional rules will reduce the remaining cap you have available.
Contribution eligibility

In order to make voluntary super contributions, at the time of the contribution, you must be:

  • Under age 65
  • Aged 65 to 74 and have been employed for gain or reward for 40 hours in a 30 consecutive day period during the financial year
    • This includes up to 28 days after the end of the month in which you turn 75
    • Spouse contributions cannot be made where the receiving spouse is aged 70 or over

Voluntary contributions generally cannot be made once you have reached age 75.

Compulsory contributions (e.g. Super Guarantee) can be made at any time regardless of your age.

How we can help

It’s important to keep your financial adviser informed about any super contributions you make so they can ensure you don’t exceed these caps. Contributions over these caps can be taxed at up to 47%.

When assessing your concessional contributions you will need to include all employer superannuation guarantee contributions from any employers over the year and any salary sacrificed amounts, as well as personal contributions for which you will claim a tax-deduction.

Download our complete Smart Super Strategies fact sheet

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Dimos Fessopoulos

Dimos Fessopoulos

Dimos is a Financial Adviser with 9 years’ experience. He takes great satisfaction in helping our clients gain peace of mind by knowing that their financial plans are on track to provide for their current lifestyle and ongoing retirement, along with optimally protecting their assets, and the interests of their families and friends. His friendly, caring nature, developed from his 20 years as a Physiotherapist, puts his clients quickly at ease allowing them to comfortably focus on their future goals and needs.

Dimos is married with 3 sons aged 20,15 and 14. His weekends are therefore spent at various sporting fields as a very keen spectator. He also continues his passion for soccer by coaching representative teams and as a committee member for the local soccer club. Dimos is also a very keen golfer and plays tennis socially.

Dimos holds a Diploma of Financial Services (Financial Planning) and a Graduate Diploma of Applied Finance (majoring in Financial Planning) from FINSIA. Dimos also holds a Bachelor of Applied Science (Physiotherapy) from the University of Sydney.

Dimos Fessopoulos (Director of Financial Planning) is an Authorised Representative of Count Financial Limited. Dimos' ASIC Adviser ID No is 335420.

John Mihail

John Mihail

Professionally, John has 12+ years' experience in financial planning and is a CFP® professional member of the Financial Planning Association of Australia, which is the highest designation in financial planning and recognised internationally. In addition to his CFP® studies, he also completed an Advanced Diploma in Financial Services (Financial Planning) in 2007; and non-financial tertiary studies with a Masters of Health Science (Exercise & Sports Science) in 2002, and a Bachelor of Applied Science (Occupational Therapy) in 2000, both from the University of Sydney.

Outside of work, John is married with 2 young daughters. In his spare time, he enjoys the company of family and friends, follows the success (or suffering) of the EPL's Manchester United, our Socceroos, and the NRL's Bulldogs, while fruitlessly fighting the ageing process through (short) bursts of jogging, swimming, tennis and so on. He also loves a good cup of coffee.

John holds specialist technical accreditations with Count and is authorised to provide advice on Self-Managed Superannuation Funds, Aged Care, Direct Securities, Business Insurance, and Defined Benefit Schemes.

John Mihail (CERTIFIED FINANCIAL PLANNER® professional) is an Authorised Representative of Count Financial Limited. John's ASIC Adviser ID No is 289605.

Yolla Nohra

Yolla Nohra

Yolla Nohra is our Lending & Leasing Manager and she has over 34 years' experience in a variety of roles within Chartered Accountancy practices.

Yolla holds a Diploma of Financial Services (Finance/Mortgage Broking Management), a Diploma of Financial Services (Financial Planning), is an Accredited Mortgage Consultant (AMC) from the Mortgage and Finance Association of Australia (MFAA)and she is also a member of the Credit and Investments Ombudsman (CIO), membership number: 411084.

Yolla holds a Certificate IV in Financial Services (Finance/Mortgage Broking) and is also a SEQUAL accredited Reverse Mortgage Consultant (RMC). Yolla is also a Justice of the Peace (JP). Yolla is a Credit Representative of finconnect™ (australia) pty ltd ACL 385888.

Yolla is very happily married and has 4 children, a daughter, 3 sons and a grandson. In her spare time, she enjoys spending time with her family, cooking, reading and listening to music.

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Winnie Su

Winnie Su

Winnie is a Paraplanner and Practice Manager at CBC and has been at the firm since June 2009. Winnie has over 10 years' experience in the financial services industry and over 2 years' experience in Client Services (Margin Lending).

Winnie holds a Bachelor Degree of Arts (Media and Communications) from the University of New South Wales, an Advanced Diploma of Financial Planning from Kaplan and a Diploma of Teaching from the University of Technology. Winnie is also a Justice of the Peace (JP).

Winnie was born in Hong Kong and emigrated to Sydney at the age of 5, currently living in the south-west of Sydney with her husband and their children. Winnie loves travelling, languages, computers and new technology. She has traveled to Japan several times, working there for a year in total.

Larry Chi

Larry Chi

Larry is our Financial Planning Client Services Co-ordinator and joined the firm in September 2016 shortly after completing a Bachelor of Economics (Finance and Economics) from the University of Sydney. During his time with CBC, Larry has completed a Diploma of Financial Planning in 2017 from KAPLAN.

Larry continues to work as a basketball referee over the weekend and loves spending his time on outdoor adventures with his girlfriend, shooting hoops at the basketball courts and training at the gym. He also enjoys caring for his pet fish and Subaru.

Larry hopes to explore countries around the world and aspires to become a professional in the finance industry.

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Lisa Nguyen

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