As we approach the end of the financial year (EOFY) 2025, it’s crucial to review and optimize your financial strategies. Here are some key considerations to help you make the most of this period, incorporating insights from the provided articles.
- Maximize Superannuation Contributions
Superannuation remains a tax-effective way to build retirement savings. Here are some strategies to consider:
- Concessional Contributions (CCs): The annual CC cap for 2024-25 is $30,000. If your total superannuation balance (TSB) is below $500,000, you can use unused catch-up CCs from previous years. This is particularly beneficial if you have had periods out of the workforce or have not maximized your contributions in previous years. The maximum amount that can be contributed under the catch-up rules in 2024-25 is $162,500.
- Personal Deductible Contributions (PDCs): These are after-tax contributions on which you can claim a tax deduction. Ensure you lodge a Notice of Intent (NOI) before making any withdrawals or rollovers. This option is flexible and can be particularly useful if you have a one-off spike in income, such as from a bonus or capital gains.
- Superannuation Guarantee (SG) Contributions: Employers must pay SG of 11.5% on ordinary time earnings. The rate will increase to 12% in 2025-26. It’s important to ensure that your employer is making these contributions correctly and on time.
- Salary Sacrifice (SS) Contributions: This is a disciplined approach to building retirement savings tax-effectively. Review and adjust your SS arrangements to avoid exceeding the CC cap. Salary sacrificing can reduce your taxable income while boosting your superannuation savings.
- Contributions Reserving Strategy for SMSFs: This strategy allows contributions made in June to be allocated in July, aiding in managing contribution caps and tax. This can be particularly useful for managing large contributions and optimizing tax benefits.
- Non-Concessional Contributions (NCCs)
You can make personal after-tax contributions up to age 75. The annual NCC cap for 2024-25 is $120,000, with bring-forward rules allowing up to $360,000 over three years. This strategy is beneficial for those looking to significantly boost their superannuation balance.
- Government Co-Contribution
If you make personal NCCs and meet certain income thresholds, you may be eligible for a government co-contribution of up to $500. For the 2024-25 financial year, if your income is $45,400 or less, you can receive the maximum co-contribution of $500. The co-contribution phases out for incomes up to $60,400.
- Spouse Contributions
Making contributions to your spouse’s super can provide a tax offset of up to $540 if their income is $37,000 or less. The offset gradually reduces for incomes above $37,000 and phases out completely at $40,000. This strategy can help boost your spouse’s super while providing a tax benefit.
- Contribution Splitting
You can transfer up to 85% of your prior year’s CCs to your spouse, which can help manage tax and superannuation benefits. This strategy is useful for balancing superannuation savings between spouses and optimizing tax benefits.
- Personal Income Tax Management
Consider strategies to manage your taxable income, such as prepaying deductible expenses, managing capital gains tax, and optimizing redundancy and termination payments. These strategies can help reduce your taxable income and optimize your tax position.
- Social Security Opportunities
Gifting and managing deeming rates can help maximize your social security entitlements. For example, gifting up to $10,000 per financial year can reduce your assessable assets and potentially increase your social security benefits.
- Aged Care Reforms
Significant changes to aged care costs will take effect from 1 July 2025. Planning ahead can help manage these costs effectively. Understanding the new fee structures and planning your finances accordingly can ensure you are prepared for these changes.
Conclusion
The end of the financial year is a critical time to review and optimize your financial strategies. By considering these key areas, you can make the most of your financial opportunities and ensure a secure financial future. If you have any questions or need personalised advice, feel free to contact us.