As the end of the financial year draws near, it’s time to review your financial planning circumstances and consider your super and tax strategy for THIS and NEXT financial year.
Thoughtful end of financial year (EOFY) financial planning can help make the most of your tax opportunities and boost your retirement savings. Speaking of superannuation, the coming financial year brings changes including increased contribution caps and a further increase to the Super Guarantee that could have impacts on your financial planning opportunities THIS financial year and next.
Taking timely tax and financial planning actions, can provide considerable financial opportunities. Here we delve into key considerations for this EOFY period, and the next.
Immediate Actions for THIS Financial Year
It’s important to complete all EOFY tax and financial planning tasks before mid-June. With 30 June 2024 falling on a weekend, it will rob you of a couple of business days, so we encourage you to be financially organised early so tax deductions intended for this year count.
Higher Contributions
With the upcoming Stage 3 tax cuts effective from 1 July, making voluntary concessional contributions before 30 June this year, could offer valuable financial benefits. This is because the current (higher) marginal tax rates could result in greater tax savings for contributions made this year rather than in the next financial year when the tax rates will be lower. Of course, cap limits need to be considered.
Additionally, beginning 1 July 2024 the concessional cap will increase to $30,000 and the non-concessional cap will rise to $120,000 providing more opportunity to make contributions to the tax favourable super environment.
Unused Concessional Contributions
Under the ATO’s superannuation catch-up rules, you can contribute unused concessional contribution amounts from the past five financial years to your super this year, if your total super balance was less than $500,000 at 30 June 2023. This can be especially beneficial for those who may have been unable to contribute to super in any or all financial years from 2018/19 due to reasons that may include being out of the workforce.
End of financial year super strategies for couples
There are a range of strategies that may be used this EOFY and beyond that can help couples make more of their super opportunities.
Contribution Splitting:
In circumstances where one member of a couple has a higher balance than the other, splitting eligible contributions from the prior financial year may provide an opportunity to collectively better manage potential access to super savings and other benefits. However, this must be completed well before June 30 this year, and a Notice of Intention to claim deduction form may need to be submitted prior to actioning a contribution split.
Spouse Contributions:
A tax offset of up to $540 may be available when contributing up to $3,000 into your spouse’s super account if their income is $37,000 or less. The offset decreases for incomes above $37,000 and phases out at $40,000. The rebate also reduces when the spouse contribution amount is less than $3,000.
Pre-Pay Deductible Expenses:
Consider pre-paying certain expenses to bring forward tax deductions and reduce assessable income in 2023/24. This strategy may be particularly beneficial for those who are anticipating a reduction in their marginal tax rate with the Stage 3 tax cuts from July 1, 2024.
Plan ahead…
Planning ahead to allocate part of the Stage 3 Tax Cuts savings towards super contributions starting July 1 can offer long-term financial advantages and bolster your retirement strategy. Additionally, the Super Guarantee rate will rise from 11.0% to 11.5% from July 1, 2024 which will increase retirement savings.
Commencing July 1, 2025 superannuation contributions will increase further to 12%.
Measures announced in the recent Federal Budget, if they are successfully legislated, will provide greater support for families and businesses.
These include super paid on Government funded Paid Parental Leave (from July 2025), changes to the indexation of student loans which should help to reduce inflationary pressures on HECS-HELP debt, while small businesses are set to benefit from the extension of the $20,000 instant asset write-off until June 30, 2025.
Next Steps
Navigating the complexities of superannuation can be daunting, given its myriad rules. It’s easy to overlook opportunities for making the most of your super savings.
The key is to seek advice and discuss your circumstances to ensure appropriate and timely actions are made to implement your financial, super and tax plans for end of financial year.
Please accept our invitation to give us a call to discuss your financial and tax planning for this and the next financial year. Please contact Brett Cribb, Steve Nicholas, or James Marshall at +61 (0)7 3007 2007 or email info@stratusfinancialgroup.com.au. Let’s work together to achieve your goals.
Stratus Financial Group helps professionals, executives, business owners, families and retirees manage their complex financial affairs and coordinate their professional advisers.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decisions.
