The end of the financial year is an important time for individuals and businesses alike as it marks the deadline for various financial reporting obligations. There are several strategies you can use to prepare for the end of financial year and optimize your financial situation.

Add to your super and get a tax deduction.

If you are eligible, making a personal contribution to your superannuation before the end of the financial year can be a smart way to boost your retirement savings while also reducing your taxable income. One way to maximize the benefits of making a personal contribution to your superannuation is to claim a tax deduction for the contribution. This can help you reduce your taxable income and potentially increase your tax refund or reduce your tax bill.

To be eligible you will need to meet certain criteria including:

• Being under the age of 67, or between 67 and 74 and meet the work test
• Submitting a notice of intent to claim a deduction to your superannuation fund before the end of the financial year
• Have not exceeded your concessional contributions cap

The concessional contributions cap for 2022-23 financial year is $27,500. This includes any contributions made by your employer, as well as any personal contributions you claim as a tax deduction. The contribution is generally taxed at 15% (or up to 30% if your income is above $250,000) which is potentially lower than your marginal tax rate which could be up to 47%. If you are making a contribution right at the end of the financial year, it is important to check cut-off dates with your super fund to make sure that your contribution is received and allocated to the right financial year.

Before making a personal contribution and claiming a tax deduction it is important to consider your financial situation and goals as well as speak to a financial adviser to ensure if it is the right strategy for you.

Get a super top-up from the Government.

A super co-contribution is an incentive provided by the Australia Government to encourage low to middle-income earners to save for their retirement by making voluntary contributions to their superannuation fund.

Under the super co-contribution scheme, the government will match the amount of after-tax contributions made by an eligible person up to $500 depending on the individuals income and the amount of their voluntary contribution. The amount of the co-contribution decreases as the individual’s income increases and phases out completely once their income exceeds a certain threshold.

To be eligible for the super co-contribution there are certain criteria you must meet:

• Earn less than $57,016 pa (as of the current 2022-23 financial year).
• Be under the age of 71 at the end of the financial year.
• You must have lodged an income tax return for the financial year and have not exceeded your non-concessional contributions cap for the financial year.

As a general rule:

• The maximum co-contribution of $500 is available if you contribute $1,000 and earn $42,016 or less.
• A reduced amount may be received if you contribute less than $1,000 and/or earn between $42,017 and $57,016.

If you meet all of the above requirements you may be eligible for a super co-contribution, The Australia Tax Office (ATO) will determine whether you qualify and in most cases pay the amount directly into the super fund in which you made the contribution.

It’s important to note that rules around eligibility can change from year to year so it’s always a good idea to check with a financial adviser to confirm your eligibility and to understand the current rules and limitations of the scheme.