We encourage you to should speak to a professional financial adviser before you use any of these strategies as an adviser can assess your situation and work out which strategies are best suited to you.
* Includes a Medicare levy of 1.5%.
^ Includes assessable income plus reportable fringe benefits. The most recent budget proposes to also include salary sacrificed income from 1 July 2009.
Certainties in Life - Death and Taxes
It's that time of year again! The end of the financial year, when we again glance at our group certificates (or balance sheets for business owners) and wonder where all the money we apparently earned went!
So the question on everyone's minds should be - what can we do in the month of June to ease some of the pain? Planning now won't necessarily answer the question on where all your hard earned money went, but at least you can start to build and protect your wealth in a tax-effective manner.
It is worth noting though, that you should never invest solely for tax purposes because if your investment performs poorly, your loss may outweigh any tax savings you have received.
When you have a family, raising kids and providing for them takes up all your time and energy. Retirement can feel a long way off when you're busy paying school/day care fees and making mortgage payments.
But tax time is a great opportunity to take stock and begin to plan for the future, by taking action now, even in the smallest of ways; you can set yourself up to live well when you do stop working.
It's not really about sacrifice. It's about taking advantage of the fact that the money you put into super from your pre-tax salary will only be taxed at a maximum rate of 15 percent. Depending on your marginal tax rate, which could be as high as 46.5* percent, you could put more funds into super without largely effecting on your take home pay.
If you earn less than $58,980^ pa you could be eligible to receive a Government co-contribution to your super. To qualify for the full co-contribution of $1,500 you generally need to make a personal after tax super contribution of at least $1,000, and earn less than $28,980^ per year. A reduced co-contribution may be payable if you contribute less than $1,000 and/or earn between $28,980^ and $58,980^ pa. This strategy now also applies for the self-employed.
Everyone wants to retire comfortably and enjoy the good life after years of hard work, and unfortunately the chances of winning tattslotto to provide this are, at best slim, so why not take the safer bet with superannuation planning?
If you're an employee aged 55 or over, there is a way to save more for your retirement without reducing your current income. It involves investing some of your existing super in a 'Transition to Retirement Pension' (TRP) and using the regular payments from the TRP to replace the income you sacrifice into super.
If you're self-employed, investing some of your business income in super as a personal deductible contribution instead of making salary sacrifice contributions would give the same outcome.
Making salary sacrifice or personal deductible super contributions can be a great way to boost your retirement savings. But don't forget the contribution caps, if you want to invest larger amounts in the lead up to your retirement, you may need to act quickly. The current cap of $100,000 pa that is available to people aged 50 or over will reduce to $50,000 from 1 July 2012.
Prepared by Angela Jenkins - a CERTIFIED FINANCIAL PLANNER™. Angela and Aequis Pty Ltd are Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749 Australian Financial Services Licensee Registered Office at 105 - 153 Miller Street North Sydney NSW 2060. GWM Adviser Services Limited is a Principal member of the Financial Planning Association.
