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By Trish Harding

The Coalition wins a third term – your superannuation update in preparation for the end of the financial year

The Coalition Government has been re-elected in the 2019 Federal Election, with a small majority of seats in the House of Representatives, after taking a policy of stability for superannuation to the election.

After the introduction of the significant changes that came into effect on 1 July 2017, you may be relieved to hear that for at least the next three years, we hope to have sustained stability for super. You may also be relieved to hear the proposal to ban refunds for excess franking credits and other superannuation changes will not be implemented.

What the Coalition proposed in the 2019 budget

Before the election, the Coalition did announce tweaks to the superannuation system that we anticipate (remember they are not yet legislated) will be implemented by the Government including:

  • Guaranteeing no new taxes on superannuation.
  • Greater flexibility for retirement contributions.
    • From 1 July 2020, Australians aged 65 and 66 will now be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the work test. Previously, this was only available to individuals below 65.
    • This also includes extending access to the bring-forward arrangements to individuals aged, 65 and 66 which allows individuals to make three years’ worth of non-concessional contributions to their super in a single year.
    • Increasing the age limit for individuals to receive spouse contributions from 69 to 74.
    • Increasing the number of allowable SMSF members from 4 to 6

What can you do before 30 June 2019?

With the end of financial year now fast approaching and certainty with the Government and its super policies it is the time to ensure you have taken advantage of opportunities before 30 June. We have compiled some strategies that you may like to consider.

1. Add to your super and claim a tax deduction

Deductions for personal contributions can be claimed by employees and self-employed (to the maximum concessional contribution cap of $25,000 as detailed below).

How it works

If you contribute some of your after-tax income or savings into super, you may be eligible to claim a tax deduction. This means you’ll reduce your taxable income for this financial year – and potentially pay less tax and at the same time, you’ll be boosting your super balance.

The contribution is generally taxed at up to 15% in the fund (or up to 30% if a high-income earner over $250,000). Depending on your circumstances, this is potentially a lower rate than your marginal tax rate, which could be up to 47% (including the Medicare Levy) – which could save you up to 32%.

Once you’ve made the contribution to your super, you need to send a valid ‘Notice of Intent to claim a deduction’ to your super fund, and receive an acknowledgement from them, before you complete your personal tax return, start a pension, or withdraw or rollover the money.

Keep in mind that personal deductible contributions count towards the concessional contribution cap, which is $25,000 for this 2018/19 financial year (which also includes all employer contributions, including the 9.5%pa Superannuation Guarantee and salary sacrifice). Penalties may apply if you exceed the cap – so it’s important that you stay within the limits.

2. Get more from your salary or a bonus

If you’re an employee, you may be able to arrange for your employer to direct some of your pre-tax salary or a bonus into your super as a ‘salary sacrifice’ contribution. Again, you’ll potentially pay less tax on this money than if you received it as take-home pay.

How it works

Ask your employer if they offer salary sacrifice. If they do, it can be a great way to help grow your super tax-effectively. Remember salary sacrifice contributions count towards your concessional contribution cap, along with any superannuation guarantee contributions from your employer and personal deductible contributions.

3. Convert your savings into super savings

Another way to invest more in your super is with some of your after-tax income or savings, by making a personal non-concessional contribution.

Although these contributions don’t reduce your taxable income for the year, you can still benefit from the low tax rate of up to 15% that’s paid in super on investment earnings. This tax rate may be lower than what you’d pay if you held the money in other investments outside super.

How it works

Before you consider this strategy, make sure you’ll stay under the non-concessional contribution cap, which in 2018/19 financial year is $100,000 or up to $300,000 if you meet certain conditions. That’s because after-tax contributions count as non-concessional contributions, penalties apply if you exceed the cap.

Also, to use this strategy, your total super balance must have been under $1.6 million on 30 June 2018.

Remember, once you’ve put any money into your super fund, you won’t be able to access it until you reach preservation age or meet other ‘conditions of release’. For more information, visit the ATO website at

4. Get a super top-up from the Government

If you earn less than $52,697 in the 2018/19 financial year, and at least 10% is from your job or a business, you may want to consider making an after-tax super contribution. If you do, the Government may make a co-contribution of up to $500 into your super account.

How it works

The maximum co-contribution is available if you contribute $1,000 and earn $36,813 per annum or less. You may receive a lower amount if you contribute less than $1,000 and/or earn between $37,697 and $52,697 pa.

Be aware that earnings include assessable income, reportable fringe benefits and reportable employer super contributions.

5. Boost your spouse’s super and reduce your tax

If your spouse is not working or earns a low income, you may want to consider making an after-tax contribution into their super account. This strategy could potentially benefit you both: your spouse’s super account gets a boost, and you may qualify for a tax offset of up to $540.

How it works

You may be able to get the full offset if you contribute $3,000 and your spouse earns $37,000 or less per annum (including their assessable income, reportable fringe benefits and reportable employer super contributions).

A lower tax offset may be available if you contribute less than $3,000, or your spouse earns between $37,001 and $39,999 per annum.

6. Spouse Contribution splitting

This strategy involves concessional contributions, such as employer, salary sacrifice or self-employed contributions made in the current 2018-19 tax year. These eligible concessional contributions (lesser of 85% of the actual annual concessional contributions made, or the allowable concessional contribution limit), may be transferred into a spouse’s super account, which may help some remain under the $1.6 million limit while building their partners account.

For example, James has $1.62 million held between superannuation and pension accounts but spouse Mary has only $300,000. Under the pension transfer cap, if no changes are made then James is likely to incur taxon part of his funds in retirement whereas Mary will not. If James exercised the spouse splitting contribution strategy and transferred $20,000 to Mary’s account 2018-19 financial years (subject to eligibility criteria), James and Mary would fall below the $1.6 million cap which means they wouldn’t have to pay tax on their pension investment earnings come retirement. Couples should review their finances together, as the strategy will also benefit pre-retirees whose account balance is currently below $1.6 million but likely to get close in the future.

However, this strategy is complex, and we recommend you contact Sterling Planners if you believe this strategy would be of benefit to you.

7. Income Protection Insurance

Please remember that if you have paid Personal (i.e not owned within a Super fund) Income Protection insurance premiums in the 2018/19 tax year, these should be tax deduction and claimed as such in your 2018/19 tax return.

Should you wish to discuss any of the above options, please call our office on 02 8904 9793.

If you do wish to make a top up Super contribution (i.e. up to maximum $25,000 including your employer 9.5% contribution as per option 1), please email our office at we will respond with the BPAY deposit details unique to your member account (i.e credited directly to your fund’s cash account), together with required form which confirms your intention to claim a deduction.

Please note that if Sterling Planners are not the nominated (authorised) adviser for your Super fund, you will need to contact your fund directly to arrange the contribution.

*IMPORTANT, as 30 June 2019 falls on a Sunday this year, should you wish to make a contribution into superannuation using any of the strategies mentioned above, EFT & BPAY payments will need to be actioned by Tuesday 25 June 2019 and if making a contribution by cheque, this needs to be received by the Fund by Thursday 27 June 2019.