Understanding super contributions and capital gains tax before EOFY—Noel Whittaker
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Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: [email protected]
June 30 is fast approaching, so now’s the time to get advice on how to save tax.
The end of the financial year is crucial for capital gains tax (CGT). It only kicks in when you dispose of the asset, and you must have owned it for more than 12 months to get the 50% discount.
For CGT purposes, it’s the contract date that counts, not settlement.
If you're selling property, talk to your accountant about whether to date the contract before or after June 30. A later date gives you 12 more months to pay CGT, but your tax bracket is what really matters.
Capital gains are added to your taxable income in the year the sale is triggered. Often, you can cut the tax by making deductible contributions to super.
A little-known strategy that can be great for retirees under 67 is to use catch-up contributions.
These days, every cent saved counts—especially from taxes! Image Credit: Shutterstock
Provided your superannuation balance is under $500,000 at June 30 last year, you may be able to make tax-deductible catch-up concessional contributions right back to 2019. This could give rise to a personal tax deduction of over $100,000 and wipe out some CGT.
It's complex, so take advice if you think it is appropriate for you.
Making tax-deductible superannuation contributions up to your maximum concessional cap of $30,000 a year is a no-brainer. Once you have reached that cap, consider making a contribution for your spouse. If they earn less than $37,000 this financial year, you may even get a tax offset as a bonus.
Get advice on your particular circumstances, as this tax offset is unlikely to be a better option than making a deductible contribution for yourself.
To qualify for the spouse contribution tax offset of $540, all you need to do is make a $3,000 non-concessional contribution on their behalf. Your spouse may also like to consider making a non-deductible super contribution for themselves of $1,000, if they are eligible for a $500 government co-contribution.
A re-contribution strategy is worthwhile if you have access to superannuation and are still eligible to make contributions. You could withdraw up to $360,000 tax-free and re-contribute it as a non-concessional contribution, on which there would be no entry tax.
Whether you're selling property or stacking your super, the right moves now could save you thousands in tax. Image Credit: Shutterstock
By doing this, you would convert a large chunk of the taxable component of your fund to non-taxable, alleviating substantial taxes for your inheritors if you died suddenly and your superannuation went to a non-dependent.
The cap for concessional superannuation contributions is $30,000, and for non-concessional superannuation contributions is $120,000 for the 2025 financial year. To make contributions to superannuation and to utilise these caps, your fund must receive your contributions by 30 June.
If you have more than one fund, all contributions made to all of your funds are added together and counted towards contribution caps.
The closer you get to your preservation age, the more important it becomes to boost your superannuation.
In addition to the concessional contributions mentioned above, you also have the option of making non-concessional contributions—if you have the funds available.
Take advice if you are nearing age 75. Apart from the downsizing contribution, it may be your last chance to boost your superannuation.
Take advice about using the bring-forward rule, which may allow you to contribute up to $360,000 as a non-concessional contribution. This will move funds to an area where tax will be zero once you start drawing a pension from your fund.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. Always seek professional advice that takes into account your personal circumstances before making any financial decisions. The views expressed in this publication are those of the author.
