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Self-Managed Superannuation Funds

New financial year, time to review your superannuation strategy

Chris Morcom
Partner/Private Client Adviser
13 Jul 2015

The start of the new financial year is a great time review and take stock of your superannuation strategy.

For those contributing extra to superannuation, it is worth checking to ensure you are not going to exceed your contribution cap, or alternatively whether you can afford to contribute more to your super in the year ahead.  Salary sacrifice superannuation contributions are one of the best ways to save extra for retirement and reduce your taxable income.

How does it work?

Both salary sacrifice superannuation contributions and your employer’s compulsory Superannuation Guarantee contributions are called Concessional Contributions.  The following table provides a summary of the maximum Concessional Contribution you can make for the 2015/16 financial year.

Keep in mind that if you have multiple employers, the above limit applies to all concessional contributions from all sources.

An employer must make Superannuation Guarantee (SG) contributions at the rate of 9.5 per cent of an employee’s ordinary time earnings. For the 2015/16 financial year, the maximum quarterly SG payment works out to be $19,307.80 for the year. For the 2014/15 financial year, it was $18,783.

An employee receiving the maximum SG amount would have ordinary earnings in excess of $203,000 for the year.  If they were 49 or over on 30 June 2015, they could salary sacrifice $16,000 as extra super contributions for the year. 

This would help them accumulate more towards funding their retirement, and they would save around $5400 per annum in tax under the arrangement.  If they earned over $300,000, the extra 15 per cent tax on contributions would reduce the overall tax saving of the arrangement to around $3,000. 

Excess contributions

If you exceed your concessional contribution limit you will need to pay tax on the excess  contributions at your marginal tax rate, plus an excess contributions charge (effectively interest on the excess), plus interest on the tax and charge.  The Australian Taxation Office detects whether an excess contribution has been made and calculates the extra tax payable through matching of superannuation fund returns and individual tax returns. 

Given the extra costs to over-contributing, now is a good time to review the year ahead and adjust your salary packaging arrangements if necessary.

The information provided above is general advice only and does not take into account your personal circumstances.  You should seek advice from a suitably qualified professional before making changes to your financial strategy.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.