As we approach 30 June 2020, and subsequently provide information on our EOFY planning tips, we are mindful that some of us may be in a different financial situation than last year due to the COVID-19 pandemic.
Given this, we have also included information that may be beneficial in this respect. However, as with any of the tips provided below, it’s vital to assess the relevance to your personal circumstances before taking action.
EOFY planning tips
Contribute to your super
- Making concessional contributions (and potentially using the carry-forward provision if your 30 June 2019 total super balance was below $500,000) could help reduce your personal income tax now, and provide for your retirement.
|Concessional contributions cap|
|Financial year||Contributions cap amount per year|
|Carry-forward provision (as an example)|
|Financial year||Total super balance (at 30/06/19)||Unused cap carried forward from 2018/19 financial year||Carried forward cap available (at 01/07/19)|
|2019/20||< $500,000||Up to $25,000||Up to $50,000|
Please click here for further information on concessional contributions and eligibility.
- Making non-concessional contributions (and potentially using the bring-forward rule) could help provide for your retirement. And, you may be eligible for the Government co-contribution (up to $500).
|Non-concessional contributions cap|
|Financial year||Total super balance (at 30/06/19)||Contributions cap amount per year|
|2019/20||< $1.6 million||$100,000|
|$1.6 million +||Nil|
|Financial year||Total super balance (at 30/06/19)||Contributions cap amount (including bring-forward)||Bring-forward period|
|2019/20||< $1.4 million||$300,000||3 years|
|$1.4 million to < $1.5 million||$200,000||2 years|
|$1.5 million to < $1.6 million||$100,000||1 year|
|$1.6 million +||Nil||N/A|
Please click here for further information on non-concessional contributions and eligibility.
Contribute to your spouse’s super
- Splitting up to 85% of your concessional contributions in the previous financial year with your spouse (contribution splitting) could help provide for your spouse’s retirement. Contribution splitting could also be an important consideration given the transfer balance cap.
Please click here for further information on contribution splitting and eligibility.
- Making non-concessional contributions for your spouse (spouse contributions) could help provide for your spouse’s retirement. And, you may be eligible for the spouse contribution tax offset (up to $540), which could help reduce your personal income tax now. Spouse contributions could also be an important consideration given the transfer balance cap.
|Spouse contribution tax offset*|
|Financial year||Shaded out threshold||Cut out threshold|
*The offset is 18% of the lesser of:
- $3,000 reduced by $1 per $1 of your spouse’s income above $37,000.
- Or the total contribution to your spouse.
Please click here for further information on spouse contributions and eligibility.
Withdraw from your super
- Accessing your super through the new, temporary condition of release, ‘COVID-19 early release of super’, could help provide extra cash flow if you are currently experiencing financial difficulty. However, please consider the potential impact on your retirement when doing so – and, any potential impact on your insurance arrangements in super.
|COVID-19 early release of super|
|Financial year||Withdrawal cap amount|
|2019/20||Up to $10,000 tax-free|
Please click here for further information on ‘COVID-19 early release of super’ and eligibility.
Meet your account-based pension payment obligations
- Taking your minimum annual pension payment requirements will help provide for your present and future needs. However, temporary changes for the 2019/20 financial year (and the 2020/21 financial year), reduce the minimum annual payment due to the impact of the COVID-19 pandemic.
|Minimum annual account-based pension payment requirements|
|Financial year||Age||Minimum percentage drawdown*|
|2019/20||Under 65||2.0% (previously 4%)|
|65 to 74||2.5% (previously 5%)|
|75 to 79||3.0% (previously 6% )|
|80 to 84||3.5% (previously 7%)|
|85 to 89||4.5% (previously 9%)|
|90 to 94||5.5% (previously 11%)|
|95 +||7.0% (previously 14%)|
*Considering the temporary changes, you may wish to review your pension payment nominations (e.g. whether you have nominated a ‘minimum pension payment amount’ or ‘fixed pension payment amount’) in light of your retirement lifestyle needs.
Please click here for further information on minimum annual pension payment requirements.
Additionally, if you run your own self-managed super fund, please watch our animation, ‘An end of financial year checklist for SMSFs‘, as many of your responsibilities fall at or around the end of financial year.
Manage your capital gains and losses
- Deferring the sale of an asset with an expected capital gain (and applicable capital gains tax liability) to a future financial year could help reduce your personal income tax now.
- Deferring the sale of an asset with an expected capital gain until it has been held for 12 months or more could help reduce your personal income tax.
|Capital Gains Tax (CGT) calculation method|
|Taxpayer||Asset acquired||CGT payable (asset held ≥ 12 months)|
|Individual||From 22/09/1999||Tax on 50% of nominal gain|
- Offsetting a crystalised capital gain, with an existing capital loss (carried forward or otherwise) or selling an asset currently sitting at a loss, could help reduce your taxable income.
Please click here for further information on capital gains and losses, and capital gains tax.
Please note: When it comes to the sale of an asset that triggers a capital gain or loss, it’s important to remember that this decision should also be consistent with your overall investment strategy.
Prepay your deductible interest and bring forward your deductible expenses
- Prepaying deductible interest could help reduce your personal income tax for this financial year:
- Interest payments on investment loans for things such as property or shares.
- Bringing forward deductible expenses could help reduce your personal income tax now:
- Income protection insurance premiums.
- Donations to deductible gift recipient organisations.
- Repairs/maintenance to investment properties (rented out or available/advertised for rent).
- Work-related expenses, such as vehicle and travel expenses, clothing expenses, home office expenses, and self-education expenses.
Purchase private health insurance
- Taking out private health insurance could help reduce your Medicare levy surcharge. And, if applicable, you may find that you could avoid, or reduce, the impact of the lifetime health insurance cover loading.
|Medicare levy surcharge (MLS)|
|Financial year||Singles||Families*||MLS rate|
|2019/20||< $90,001||< $180,001||0%|
|$90,001 to $105,000||$180,001 to $210,000||1.0%|
|$105,000 to $140,000||$210,001 to $280,000||1.25%|
|$140,001 +||$280,001 +||1.5%|
*The thresholds for families increase by $1,500 for each MLS dependent child after the first.
Please click here for further information on private health insurance and MLS.
- Given, for example, the recent change to the social security deeming rates (effective from 1 May 2020), this could be an appropriate time to reassess your eligibility for social security entitlements, such as the Age Pension or the Commonwealth Seniors Health Card. And, from an ‘EOFY’ time-sensitive perspective, if you are a recipient/holder of one of these entitlements on 10 July 2020, you could be eligible for the Government’s second $750 support payment.
With the end of financial year on the horizon, it’s important to review areas of your personal finances, and take action if applicable, before 30 June. Doing so could give your personal finances a much-needed boost.
By seeking professional advice, an assessment can be made as to the EOFY planning tips that may be appropriate for you, based on your personal circumstances. Importantly, we can help with this.
Lastly, if you want to get a head start on preparing your tax return, please read our article, ‘Checklist: Preparing for tax time the easy way’, as it could help with organising your receipts, tax invoices and documents.
If you have any questions regarding this article, please contact us.
Get in touch
If you’d like to find out more about any of the above opportunities, then please get in touch.
We’d be more than happy to run through your financial situation with you to ensure you’re making the most of your superannuation accounts.
If this article interested you and you would like to speak to Pat Casey on the phone, select a time to speak Pat – Financial Planner Sydney.
At Assure Wealth we specialise in helping busy, successful families structure their finances to achieve greater wealth and financial peace of mind.
Disclaimer: The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your Walker Lane Pty Ltd Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Walker Lane nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.
Assure Wealth Pty Ltd ABN 31 965 466 780 Corporate Authorised Representative no. 1244817, Patrick Casey Sub-Authorised Representative no. 1244748 of Walker Lane Pty Ltd ABN 70 626 199 826, an AFSL holder No 509305.