Start The New Financial Year Strong With This EOFY Checklist
As the 2023-24 financial year winds down, many Australians are finding they have plenty of financial upkeep to do.
Below, we run through some upcoming changes you should be aware of, as well as a few tips for staying on top of your finances at this time of year.
The super contribution caps are increasing
The super contribution caps are increasing on 1 July this year, meaning that Australians will have more scope to boost their retirement savings by making extra contributions.
The annual cap for concessional contributions will go up from $27,500 to $30,000, while the cap for making non-concessional contributions will increase from $110,000 to $120,000.
Concessional contributions include the compulsory super payments made by employers, contributions made as part of salary sacrifice arrangements, and voluntary contributions that are claimed as tax deductions. They are generally taxed at 15%, which is lower than the marginal tax rates that apply on most incomes.
If you’re thinking about putting some of your take-home pay or savings into your super and claiming this as a tax deduction, just remember to submit a Notice of Intent form to your super fund. This should be done before you complete your tax return, before 30 June of the following financial year, or before you move money out of the super fund (whichever comes first).
And if you haven’t maxed out your concessional contribution caps over the previous five years, you might be able to carry them forward to increase your cap this year. To be eligible to do this, your total super balance will need to be less than $500,000 at 30 June of the previous financial year.
Other super news
Also on 1 July, the minimum amount of super that employers have to pay their workers (known as the Superannuation Guarantee rate) will increase from 11% of employees’ ordinary time earnings to 11.5%. These increases are scheduled to continue until the SG rate reaches 12% on 1 July 2025.
As for the general transfer balance cap, which is the total amount of super you can transfer to a tax-free retirement phase account, this will remain unchanged at $1.9 million. This figure is periodically indexed in line with inflation, and the December quarter didn’t return a CPI high enough to justify raising it by the usual $100,000 increment.
Keep in mind that your personal transfer balance cap may be less than the general transfer balance cap. You can find out your personal cap through the ATO portal within myGov.
The stage three income tax cuts to take effect
The much heralded stage three tax cuts will take effect from 1 July, meaning you might find yourself with some spare cash in your pocket once they kick in. For many Australians, the extra take-home pay will go straight to their savings account or mortgage. But if your situation allows it, it might be worth using that extra cash to top up your super.
Getting your documents ready for tax season
Disorganisation can be a costly trait come tax time. Whether you lodge your taxes yourself or with the help of an accountant, try to round up as many relevant documents as you can so you can maximise the deductions available to you. Some of the documents you’ll need when preparing your tax return include:
Income statements
Information about any rental income, interest and dividends
Mortgage statements
Receipts for work-related expenses
Documents relating to the buying and selling of property or shares
A copy of last year’s tax return
When this year’s tax return is done and dusted, think about how you might organise the above documents so you’re not left scrambling next year. Some people use a binder, while others play to their strengths by going digital. That might mean keeping track of things using a spreadsheet or scanning and uploading documents with your phone. The Government has an app called MyDeductions that might assist with this process
Review your insurance cover
The new financial year is also a good time to look over any insurance policies you have in place to make sure they’re still suitable. This goes doubly so if your circumstances have changed over the last year. For example, if you’ve had a child, your list of beneficiaries might be in need of an update. And if you’ve recently paid off your mortgage, seen your income change, or your children are now financially independent and have moved out of the family home, you might decide to change the level of cover you have.
Think about making a spouse super contribution
If your spouse has an annual income of less than $40,000 and their super balance is falling behind, you might be able to top up their account and claim a tax offset on the amount contributed. Under current rules, a tax offset of up to 18% (a maximum of $540) can be claimed on the first $3,000 you contribute to their super, so long as you both meet the eligibility criteria. Speak to your adviser about this strategy
