Now is the time to plan tax-saving strategies for this end-of-financial-year using superannuation. There are several options available to reduce tax bills, depending on personal circumstances.

Everyone under age 75 can contribute up to $27,500 per year to super and claim a deduction for it. If they complete and lodge their tax return early in the new financial year they should quickly receive a healthy tax refund based on their marginal tax rate.

The $27,500 limit includes employer super guarantee payments. So if they are, say $10,000, then up to $17,500 extra can be contributed. That should give a large refund. Entry tax of 15 per cent is applied to the contribution but the balance is in the fund building up retirement savings.

People who can benefit from larger tax deductions may be able to use the “catch-up provisions”. If their total super balance was less than $500,000 at 30 June 2023 they can catch up contributions they were entitled to make over the last five years but didn’t.  

So if they have had an unusually high income year due to a bonus, a very profitable year in business, or capital gains on the sale of a property or shares, they may qualify for a tax deductible super contribution of $50,000 or even more.

People who have a low-income spouse can earn a rebate off their tax bill by making a contribution to the spouse’s super account. If the spouse’s income is below $40,000 and the partner contributes $3,000 for the spouse, the partner will receive a $540 reduction in their tax bill.

Lower income earners can also attract a free $500 boost to their super account from the Government via the Government co-contribution scheme. To qualify they must earn less than $43,445 per annum and contribute $1,000 to their own super account without claiming a tax deduction for it.

Non-tax-deductible super contributions don’t generate an immediate tax refund, but they do give fund members the opportunity to put more of their savings into the very tax-sheltered environment.

Earnings in a super accumulation account are taxed at a maximum of 15 per cent. Once converted to a retirement pension account, earnings are entirely tax free.

Members can contribute up to $110,000 per year this way. They can also bring forward two future years contributions and put in $330,000 now, provided they don’t contribute any more for three years.

Superannuation is simply a concessional tax environment available to anyone who follows the rules. Within their super account people can choose whatever investments they prefer. It’s time to get this year’s tax saving contributions done.