WEEKLY E-MAIL

16 June 2021

END OF FINANCIAL YEAR STRATEGIES

By James Malliaros

Following the previous email on concessional contributions, this email looks at other strategies to boost your superannuation.

These strategies are the Government Co-Contribution and Eligible Spouse Contribution.

Government Co-Contribution

For eligible people who make Non-Concessional Contributions, the Government will kick in up to a further $500 into their superannuation account.

How does the Co-contribution work?

If you earn less than $39,837 in the 2020/21 Financial Year, make a Non-Concessional Contribution and meet other eligibility criteria, the Government will assist your retirement savings by making an additional contribution on your behalf at the rate of 50 cents for every $1 you put in, up to a maximum of $500.

What are the eligibility criteria?

You will be eligible for the superannuation co-contribution in this Financial Year if:

• You make personal Non-Concessional (after-tax) Contributions to a complying superannuation fund;
• Your total income is less than $54,837
• At least 10% of your “Total Income” is from eligible employment, carrying on a business, or a combination of the two;
• You do not hold an eligible temporary resident visa during the Financial Year;
• You are under age 71 at the end of the Financial Year;
• Have a total superannuation balance of less than $1.6 million as of 30 June 2020; and
• You lodge a tax return.

“Total Income” is your assessable income plus reportable fringe benefits and reportable employer superannuation contributions (essentially concessional contributions over superannuation guarantee amounts).

Calculating the Co-contribution amount

If your total income is less than $39,837, the Government will contribute 50 cents for every $1 you contribute, up to a maximum of $500.

However, if your total income is between $39,837 and $54,837, the co-contribution entitlement reduces by 3.33 cents for every dollar you earn over $39,837

The table below details the level of Government co-contribution that you will receive based on your total income.

Eligible Spouse Contribution

An eligible spouse contribution is simply a superannuation contribution you can make on behalf of your spouse.  There are rules on when a person can make an eligible spouse contribution and can be classified as an ‘eligible spouse’.

The spouse contributing can be any age and does not have to meet any employment rules.  However, if the spouse receiving the contribution is age 65 or over, they need to have been gainfully employed for at least 40 hours within 30 consecutive days in the Financial Year.  Contributions cannot be made once the spouse receiving the contribution reaches age 70.

If the spouse’s total income (as already outlined under the Co-contribution) is less than $37,000, you can claim an 18% tax offset on the first $3,000 of contributions that you make to their account.  The maximum offset is $540 and is reduced by $1 for every $1, by which the total of assessable income exceeds $37,000.  No tax offset is payable when income reaches $40,000.  The offset is also reduced if the contribution you make is less than $3,000.

ACTION REQUIRED:

If you believe that you have the scope to take advantage of these strategies, the required actions must be taken ASAP.  Macquarie and other banks are currently experiencing delays with the processing of transactions during this time.  So, please ensure that your contributions are made into your superannuation fund by Monday, 21 June 2021, as there is no guarantee they will be processed by 30 June if deposited after this date.

James Malliaros
Senior Financial Planner
Certified Financial Planner®
SMSF Specialist Advisor™
Authorised Representative No. 291633

If you have any questions or comments, please email me at james@gfmwealth.com.au

Disclaimer: This document is not an offer or invitation to any person to buy or sell any interest in or deposit funds with any institution.  The information here is of a generic nature, and does not take into account your investment objectives or financial needs.  No person should act upon this information without firstly seeking competent, professional advice specifically relating to their own particular situation.

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