Jul 10, 2021

Our insights

Taking steps to boost your super is always a good idea, but particularly after 2020. 

During the COVID-19 pandemic, the federal government gave Australians the option of withdrawing from their super early (up to $20,000) to support themselves during lockdown.

Many experts (including us here at CWM) warned that this would be short-term gain for long-term pain.

Without a doubt, some Australians were impacted to the point where drawing down on their super was their only option. Fair enough. But for many others, it was a knee jerk reaction that came at a significant cost.

The markets rebounded and accelerated. Most super funds had bumper years. And the McKell Institute estimated the cost in lost investment returns to Australians at $4.7 billion. Ouch. 

My super fund took a hit. What now?

So if you pulled out $20,000 and missed out on a lot of upside, you’ll be wanting to get proactive and bump up your balance again.

On the other hand, you may be retiring soon and looking to maximise your super before you stop work. Whatever reason you have, there are ways to boost and replenish your super to benefit you and your family. 

Salary sacrifice 

Chat to your employer and ask them to sacrifice some of your before tax salary and put it into your super fund, on top of the normal contribution of your employer. This boosts your super but also allows you to pay less income tax. This method does reduce the amount of pay going into your pocket, but if you have some to spare and want it utilised in a better way, for the long term, this can be a great option.

Tax deductible contributions 

Another way of topping up your super alongside what your employer gives you is making voluntary contributions to your salary with your after tax dollars. By putting in a sum of money into your super post tax, when tax time comes around you may be able to claim that sum on tax. You may also be able to use super as part of a strategy to reduce capital gains tax liabilities. But this is one to talk over with your accountant.

Help from the government 

The government also offers incentives. If you make an after tax payment of $1000 to your super fund and your earnings is equal to or less than $39,837 in the 2020/21 financial year, you could be eligible for a government co-contribution of $500. If you earn more than this sum but under $54,837 in the same time frame, you may also be eligible for a co-contribution but what you receive will reduce the more you earn over the $39,837 mark.  

Support spouse 

If you or your partner go on parental leave, or one of you does not earn as much as the other, you may be able to top up the lower earning spouse’s super. And if you’re eligible, what you contribute to your partner’s super (or vice-versa) could be claimed as a tax offset. 

Depending on how much the person earns who is receiving the super support, it could be a tax offset of 18% on up to $3000 through your tax return. Their income needs to be lower than $37,000 per year to receive the full tax offset, any higher than this and that number reduces until the earning hit over $40,000 then no offset can be received, but contributions to the super can still be made.  

Get advice

If there’s one thing we’ve learned over the last year or so, it’s the importance of having a superannuation strategy. 

And while the tips we’ve provided will definitely help you, it’s crucial to get advice from your accountant and financial planner about the best way forward for your unique situation.

Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment. 

Written by Kerryn Shaw at Calder Wealth Management. 

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstance or seek advice from a financial advisor and seek tac advice from a registered tax agent. Information is current at the date of issue and may change.