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5 Smart Super Strategies to Enhance Your Retirement Savings and Reduce Taxes

Updated: Aug 25, 2023

As you continue on your financial journey, seize the opportunity to fine-tune your superannuation strategy and potentially reduce your tax liabilities. Delve into these five smart super strategies that can elevate your retirement savings and magnify your tax benefits. By embracing these tactics, you're laying the foundation for a more stable financial future and ensuring a retirement that's comfortable and worry-free.

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1. Contribute to Your Super and Claim a Tax Deduction

Boost your super balance while reducing your taxable income by making personal deductible contributions. The contribution is generally taxed at up to 15% in the fund (or up to 30% if your income from certain sources is $250,000 or more). Depending on your circumstances, this is potentially a lower rate than your marginal tax rate, which could be up to 47% (including the Medicare Levy) – which could save you up to 32%.


How It Works:

Once you've made the contribution to your super, ensure to send a valid "Notice of Intent" to your super fund and receive an acknowledgment from them. This step is necessary before completing your tax return, starting a pension, or withdrawing or rolling over the money. Keep in mind that personal deductible contributions count towards your concessional contribution cap, which is $27,500 for the 2023/24 financial year.


Pro tip: If you didn't use your entire concessional cap in financial years since 1 July 2018, you may be eligible to make 'catch-up' contributions, allowing you to contribute more than the cap without penalty.


Concessional contributions include all employer contributions, including the Superannuation Guarantee and salary sacrifice. Other eligibility rules may also apply, so speak to your financial adviser for more information. Maximize your tax savings and boost your retirement savings with this tax-effective super strategy.


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2. Optimize Your Super with Salary Sacrifice

If you're on the lookout for a powerful way to boost your super while enjoying potential tax savings, salary sacrifice could be the perfect strategy for you. Simply put, salary sacrifice involves arranging with your employer to direct a portion of your pre-tax salary or bonuses into your super. This means your super balance gets a significant boost while potentially paying less tax compared to receiving the money as take-home pay.


How It Works:

Take the first step by checking with your employer if they offer salary sacrifice as not all companies do. If it's available, consider it a golden opportunity to prioritize your super savings. By diverting a portion of your pre-tax earnings into your super before it hits your bank account, you're ensuring a dedicated approach to securing your financial future.


Pro tip: Remember that you can only salary sacrifice amounts you haven't yet received, which includes both regular salary and potential future bonus payments.


Keep in mind that salary sacrifice contributions count towards your concessional contribution cap. This cap covers employer contributions (like the Superannuation Guarantee), personal deductible contributions, and salary sacrifice amounts. Staying within this cap is vital to avoid penalties.


Make the most of salary sacrifice to supercharge your savings and create a more secure financial future! Consult your financial adviser to explore how this strategy can best align with your goals.


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3. Amplify Your Savings with Personal Contributions

Looking to supercharge your retirement savings with your after-tax income or savings? Enter the realm of personal non-concessional contributions (NCCs). While these contributions won't directly reduce your taxable income, they offer a unique advantage – super's favorable tax treatment on investment earnings, typically at a low rate of up to 15%. This means your money has the potential to grow more tax-efficiently within your super fund than outside of it.


How It Works:

Before embarking on this strategy, ensure you stay within your non-concessional contribution (NCC) cap, set at $110,000 for the 2023/24 financial year. However, you may be eligible for a higher cap of up to $330,000 if certain conditions are met. Penalties apply if you exceed the NCC cap, so careful planning is crucial.


Moreover, to make NCCs in 2023/24, your total super balance (TSB) must have been below $1.7 million as of 30 June 2021. If you're between the ages of 67 and 74, you'll need to meet the work test or be eligible for the work test exemption to contribute this financial year. But good news awaits – from 1 July, the work test requirement for NCCs will be removed.


Remember, once you've contributed to your super fund, your money becomes inaccessible until you reach your preservation age or fulfill other "conditions of release." For comprehensive information, head to the Australian Taxation Office (ATO) website at ato.gov.au.


Unleash the potential of personal contributions with the guidance of your financial adviser. It's a strategic move to amplify your retirement savings and capitalize on the tax benefits within the superannuation environment. Secure your financial future today!


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4. Supercharge Your Savings with Government Support:

If your annual income is under $58,445 (2023/24) and at least 10% of it comes from employment or business, here's an exciting opportunity to give your super a substantial boost – the Government's co-contribution scheme!


How It Works:

By contributing up to $500 of your after-tax money to your super, you could potentially receive the maximum co-contribution benefit. However, even if you contribute less than $500, you may still be eligible for a partial co-contribution based on your income.


Keep in mind that various factors, including your assessable income, reportable fringe benefits, and reportable employer super contributions, influence your eligibility. It's wise to discuss the specific conditions and possibilities with your financial adviser, who can guide you through the process and maximize your benefits.


Don't miss out on this incredible chance to accelerate your super savings with Government support! Consult your financial adviser today and unleash the full potential of the co-contribution scheme for a brighter financial future.


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5. Empower Your Spouse's Super and Reduce Tax Burden:

Imagine a win-win scenario that empowers your spouse's retirement savings while offering you valuable tax benefits. This can become a reality with a clever super strategy – making an after-tax contribution to your spouse's super account.


How It Works:

By contributing up to $3,000 to your spouse's super and if their annual income is $37,000 or less (including assessable income, reportable fringe benefits, and reportable employer super contributions), you could be eligible for the full tax offset.


Even if you contribute less than $3,000 or your spouse's income falls between $37,000 and $40,000, a partial tax offset may still apply.


To grasp the specifics and calculate your potential tax benefits, consult your financial adviser. They'll expertly guide you through the process, ensuring you maximize this fantastic opportunity to boost your spouse's super while lightening your tax burden.


Seize this smart super strategy today to strengthen your spouse's retirement savings and enjoy well-deserved tax advantages. Reach out to your financial adviser now to pave the way for a brighter financial future!


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In Need of Guidance? Schedule a FREE Consultation:

If you're unsure about maximizing your superannuation or need assistance in planning for retirement, consult Aspiram's expert advisors. Discover personalized strategies to secure a brighter financial future and make the most of your superannuation opportunities. Don't miss the chance to enhance your retirement savings and reduce taxes before the financial year ends!

General Advice Warning: The information provided is general in nature. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. This website contains information for Australian Residents only.


Sources

Commonwealth Bank of Australia. (n.d.). Five Ways to Save Tax Using Superannuation. Retrieved from https://www.commbank.com.au/articles/tax/five-ways-to-save-tax-using-superannuation.html

Super Guy. (n.d.). Tax Strategies for Retirement. Retrieved from https://superguy.com.au/retirement/tax-strategies-for-retirement/

Altus Financial. (n.d.). How Australians Can Reduce Tax in Retirement. Retrieved from https://www.altusfinancial.com.au/blog/how-australians-can-reduce-tax-in-retirement

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