There are many tax effective strategies that you can implement before 30 June to maximise your retirement benefits.
Government co-contributions
If you are an Australian resident and earn below $61,920 a year, you may be eligible for the Government Co-contribution to super. To claim your Co-contribution you will need to make a personal, after-tax contribution to your super before 30 June 2011, and the government will kick in some extra cash towards your retirement. This may be up to $1,000 in a financial year.
Personal deductible contributions
People may find themselves in a situation where they can significantly boost their retirement savings, as well as reducing their taxable income. The simplification of and changes to deductible personal contribution limits is one such opportunity. The new caps allow deductible contributions of $25,000 per year for under 50s, and until 30 June 2012 up to $50,000 per year for those aged 50-plus.
Split super with your spouse
If your spouse is on a low income, you could receive a tax offset for making a contribution to your spouse’s super fund – as long as their assessable income (including reportable fringe benefits) is less than $13,800.
However, to claim the maximum offset of $540, your spouse must earn $10,800 or less and you need to contribute $3,000 to their super in the same financial year. Because it’s a tax offset, you’ll make a direct saving against your income tax liability.
Income protection insurance
Income protection insurance is an essential part of any financial plan, designed to secure your family’s lifestyle in the event of illness or injury. Income protection insurance premiums are generally tax deductible, so if you purchase income protection insurance and pay your annual premium before 30 June 2011, you will be able to include the deduction in this year’s tax return. Business owners may also be able to claim deductions on their business insurance premiums.
Remember, every small contribution you make now will give significant effect in your retirement benefits due to 8th magic of the world (Compound interest and growth!) plus maximum tax rate of 15% in super and tax free payments after age 60 make super one of the best vehicle to build your nest egg. Please pass it on to your family and friends who may you think would be beneficial.
Above information does not form any personal advice. To review your current financial situation, contact us on 03 9018 5534 or info@fortunewealth.com.au
Rashesh Bhavsar
Financial Planner
Fortune Wealth Creation Group
Ground Floor, 566 St. Kilda Road, Melbourne.
(03) 9018 5534
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