We are now just over a month into the new financial year and most of the focus has been on the changes to super and pensions with larger balances. Today I want to touch on some of the POSITIVE changes that were introduced by the government from 1 July this year.
Yes, they do occasionally pass positive legislation.
1. Get your partner to invest in you.
There is a big change where one partner of a couple has a low income. In the past, a spouse could contribute $3000 into their partner’s super fund and they would get a reduction in tax of $540. Unfortunately the income threshold was $13,800…… This has now been increased to $40,000.
2. Free money from the government?
If you (or your spouse) earn less than $51,813 and you put in $1000 of your own savings into your super fund, the government will also put in up to $500. Free money. For a lower income earner this is a risk free rate of return of 50%. (The rules do state that your super fund balance needs to be below $1.6m, however not too many people getting by on $40k per year have this sort of balance!)
3. Pay yourself and not the taxman
Self-employed people have always had more flexibility than employees in making super contributions. They could put in lump sums to maximise the deductions AFTER they have earned the money during the year. Until now employees had to have an agreement with their employer BEFORE they earned it. This has resulted in numerous problems with employers not contributing the funds in time to meet the end of year deadline. Well, now employees can make personal contributions and then elect to claim them as a tax deduction at the end of the year. This will provide more opportunities and better control.
Of course there are a few traps to be mindful of with these three changes, so please discuss your individual situation with us before implementing.