Bruce Brammall: Don't be bitten by the tight end of financial year deadline to top up your superannuation
The movie scared the poop out of a generation of kids, and even more adults. Beaches emptied. Nearly made extinct a generation of the volunteer profession of surf lifesavers.
And (coming from a keen golfer) would Greg Norman's adopted moniker of 'Great White Shark' have ever had its influence without Jaws? Hmm.
Did Jaws send a shiver down your spine? Good. Tune in to that. I'm trying to rustle up some fear, to prod you into action.
June is grand final time for tax and superannuation.
A week today is June 30. There are certain things you can do right up until the last day. And some things you can't.
Making contributions to your super fund is one thing you can't leave until the dying seconds of the financial year. Certainly not if you're in a 'normal', or Australia Prudential Regulation Authority-regulated super fund.
Why? Because the super fund needs to both receive the funds and be able to allocate it to your account by June 30.
Banks and super funds are getting better, but still not all electronic funds transfer instantly. Funds are often transferred overnight, while BPAY can still take several days.
For example, with certain transactions from my bank, if I transfer money after 5pm on a Friday night, it doesn't leave the account until the Monday, then arrives at the intended account on the Tuesday.
And while super funds have been modernising, many still need to actually allocate the money to your account.
That is, some funds have the money coming into a big bank account where all members pay to. Then they need to allocate it to your account, which needs to be done by close of business on June 30.
So, don't risk leaving it till next Monday. Unless you know your super fund's policy, transfer it by no later than Wednesday, preferably today.
If it doesn't arrive, or get allocated, until the Tuesday, the contribution will be attributed to next financial year.
The Albanese Government has said it's going to push ahead with implementing its policy on taxing super funds over $3 million at a higher tax rate.
This is going to make it even more important that couples, particularly high earners, work together when it comes to their super strategies, including end of financial year contributions.
Why? For couples where at least one member is likely to build a large super balance, working together can help minimise tax on your super in the future. You don't want one person hitting $4m in super, while the other half of the couple has $1m.
Spouse contribution splitting allows for the transfer of up to 85 per cent of concessional contributions between spouses, after the end of the financial year.
If both members make their maximum $30,000 concessional contribution for the year, the member with the higher balance can transfer their contributions to the lower-balance member.
If maximum contributions are made ($30,000 times two), one member could effectively end up with $51,000 ($60,000 times 85 per cent) into their account.
Done every year, this can be a powerful way of evening up balances.
And if you're going to make non-concessional contributions — which has a limit of $120,000 a year, where you can use up to two future years to put in up to $360,000 in one hit — obviously consider putting that into the account of the lower-balance spouse.
June is an important month for super fund contributions, for many reasons.
For concessional contributions ($30,000 limit), the two most important are making sure you get the tax deduction and the contribution in the right year.
If you're an employer, you might want your business to have the tax deductions in the current financial year. While most small businesses don't have to pay their staff's super until 28 days after the end of a quarter, by paying June quarter staff super payments before June 30, you can claim the deduction this financial year instead of next.
Note that the superannuation guarantee rate moves up to 12 per cent on July 1. Some might need to change their salary sacrifice arrangements.
Don't put it off. If you're going to make contributions, make sure you get them done as soon as possible.
Bruce Brammall is the author of
Mortgages Made Easy
and is both a financial adviser and mortgage broker.
bruce@brucebrammallfinancial.com.au
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