As you know, June is the last month of the financial year. It does provide some opportunities for some last minute tax planning.
Therefore, some of the opportunities worth considering are:
– Maximise superannuation contributions. This year the maximum deductible contribution to superannuation is $25,000. This figure includes any SG amount plus salary sacrifice. If you are below this figure you can make a contribution to super and claim it as a tax deduction. This is available for people up to age 74 (must meet “work test” if over 65). Note, this figure moves to $27,500 next financial year.
– There are also catch up facilities to make contributions in excess of $25,000 per annum. If you have not maxed out $25,000 in the last 3 years and your super balance is less than $500,000, you may be able to put a maximum of $75,000 into super and claim a deduction. This is a really good opportunity to try and catch up on the years you could not maximise contributions.
Bring forward deductions
– If you are paying income protection premiums on a monthly basis, you may want to consider paying 12 months in advance this month. This effectively brings forward your deduction, it may also save you money, as annual premiums usually save around 10%.
– The same theory works if you have an investment property loan. You may be able to prepay the interest for 12 months in advance to bring forward the deduction.
Some budget related items
The Government is allowing minimums to stay half of the usual minimum for Account Based Pensions. This is a great opportunity leave funds in high performing Account Based Pension, while drawing down on lower performing cash.
| Age of pension member on 1 July, or start of pension if first year | Standard pension drawdown percentage | Reduced minimum pension percentage for 2019-20 and 2020-21 |
| Under age 65 | 4.00% | 2.00% |
| 65 – 74 | 5.00% | 2.50% |
| 75 – 79 | 6.00% | 3.00% |
| 80 – 84 | 7.00% | 3.50% |
| 85 – 89 | 9.00% | 4.50% |
| 90 – 94 | 11.00% | 5.50% |
| Age 95+ | 14.00% | 7.00% |
Extension of the Downsizer contribution
This currently allows people over the age of 65 who sell their primary residence (which they have lived in for 10 years), contribute up to $300,000 per person ($600,000 per couple) into superannuation. This contribution is not taxable and means you can get extra money into a tax free environment, irrespective of your age or how much you have in super. This is great for people who are downsizing or who may be moving into retirement housing. In the recent budget, the government proposed changing the age minimum age from 65 to age 60. Legislation needs to pass before this occurs.
Increased Super Guarantee
– Super guarantee goes from 9.5% this year to 10% next year.
Removing the work test
– The Government will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice superannuation contributions without meeting the work test, subject to existing contribution caps.
Pension Loan scheme
– The Government has announced that they will be increasing the flexibility of the Pension Loans Scheme (PLS) by allowing participants to access up to two lump sum advances in any 12 month period up to a total value of 50 per cent of the maximum annual rate of the aged pension. Based on current Age Pension rates, the total PLS is around $12,385 per year for singles, while couples combined could receive around $18,670.The Government will also introduce a No Negative Equity Guarantee meaning that the Government will not claim back more than the sale price of the house used to guarantee the payment when it is sold.
If you feel any of the above changes or opportunities affect you or friends and family please forward this email to them, or ask them to give us a call. We are happy to help.
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