End of Financial Year Strategies Aaron Steer AFP Senior Financial Planner

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1 End of Financial Year Strategies 2014 Aaron Steer AFP Senior Financial Planner

2 Disclaimer In preparing this information, Statewide Wealth did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, a person needs to consider (with or without the advice or assistance of an adviser) whether this information is appropriate to their needs, objectives and circumstances. The information in this presentation is based on our interpretation of relevant laws as at 20 April 2014 and is subject to change. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Statewide Wealth is not a registered tax agent. If you wish to rely on this information to determine your personal tax obligations you should seek advice from a Registered Tax Agent.

3 Content Why invest via Super? Super strategies Insurance Other tax-effective year-end opportunities How we can help

4 Why invest via Super? Tax concessions every step of the way When you contribute to super Make contributions from pre-tax salary Claim contributions as a tax deduction Get a Government co-contribution of up to $500 Get a tax offset of up to $540

5 Why invest via Super? Tax concessions every step of the way While building up super Earnings in fund taxed at maximum of 15% Earnings from investments in own name taxed at up to 46.5%

6 Super EOFY strategies For middle to higher income earners under 55 Get more from your salary or bonus If you are an employee You may want to salary sacrifice contribute pre-tax salary or bonus into super So you can benefit from contribution taxed at max. 15%, (or 30% for people whose earnings and contributions are more than $300k+ p.a.) not marginal rate which is up to 46.5% grow retirement savings reduce tax payable on salary or bonus by up to 31.5%

7 Salary sacrifice case study William is aged 45 About to receive a $5,000 pa salary increase Will bring his total salary to $100,000 pa Considering salary sacrificing this additional $5,000 into super

8 Salary sacrifice case study Per annum Sacrifice pay rise into super Receive pay rise as after-tax salary Pre-tax pay rise $5,000 $5,000 Less income tax at (N/A) ($1,925) 38.5% 1 Less tax on super contribution Net amount invested Tax paid on earnings ($750) (N/A) $4,250 $3,075 15% 38.5%

9 Super EOFY strategies Make tax deductible super contributions If you are self-employed or not employed You may want to make personal super contributions So you can claim some (or all) of contribution tax deduction grow retirement savings use deduction to reduce taxable income and income tax payable

10 Consider contribution caps Salary sacrifice and personal deductible contributions count, along with other amounts, to concessional contribution (CC) cap The concessional cap is $25,000 in * The caps are annual amount and you can t carry forward any unused amount to another financial year It s really important you make the most of the cap each year, particularly if you are approaching retirement Opportunity to make larger last minute concessionally taxed contributions no longer available People who earn in excess of $300K pay an additional 15% tax on concessional superannuation made over the $300K threshold and within the cap * For people aged 58 or under on 30/6/13 and $35,000 for people aged 59 or over on 30/6/13. From 1 July 2014, the general concessional cap will be increased to $30,000. For people aged 49 and over on 30/6/14, their concessional cap will be $35,000 from 1 July 2014.

11 Cap implications Excess concessional contributions for the financial year and beyond are generally returned to the member and taxed at their maximum tax rate (MTR). An Excess Concessional Contributions Charge will also be applied by the ATO. Review this year s contributions and remember that a range of other items count towards this cap, including: super guarantee contributions, including those from more than one employer concessional contributions made to fund insurance in super Review your contributions from 1 July 2013, particularly if you are an employee as the superannuation guarantee rate has increased from 9% to 9.25%*. *The SG rate is planned to increase to 9.5% on 1 July 2014 however legislation is currently before parliamentto defer the increase. If enacted this will mean that the rate will remain at 9.25% for the 2014/15 year.

12 Super EOFY strategies Get a super top up from the Government If you earn at least 10% of income from employment or selfemployment earn a total income of $48,516 or less You may want to make personal after-tax contributions So you can get up to $500 in free super from Government spouse may qualify for co-contributions if you earn too much

13 Other super EOFY strategies Make insurance more affordable Self-employed Employee Establish Life and TPD insurance in super Eligible for co-contribution Claim super contributions as tax deduction Buy insurance in super with pretax dollars Use co-contribution to help pay for future insurance Concessions can: Make it cheaper to insure through super, or Enable you to purchase a higher level of cover

14 Other smart EOFY opportunities Pre-pay expenses If you want to bring forward tax deductions and pay less tax this financial year you could: Pre-pay annual premiums for an income protection policy held in your own name Pre-pay up to 12 months interest on an investment loan (usually only available with fixed rate facilities)

15 Other super EOFY strategies Investment earnings Pay less on investment earnings Cash out non-super investment Make personal super contribution Earnings in super fund taxed at max. rate of 15% Earnings from investment in own name taxed at up to 46.5% Reduce tax on investment earnings by up to 31.5% Consider capital gains tax payable when selling asset

16 Strategy wrap-up Before June 30 After June 30 Super strategies Salary sacrifice contributions Personal deductible contributions Co-contributions Spouse contributions Key issues to consider Review concessional contributions Review TTR strategy Make the most of your tax refund Insurance strategies Establish insurance in super Pre-pay expenses Other smart opportunities Invest non-super money in super Manage CGT

17 How we can help? FPA Accredited Financial Professionals Phone aaron@statewidewealth.com.au Web Gympie Road, KEDRON QLD 4031 Call or today for a no obligation review of your personal circumstances.