Four EOFY opportunities to achieve your financial goals
As the end of the financial year draws near, it is a critical time for individuals and businesses to assess their financial position and implement strategic measures to improve their outlook. Here are four ways to achieve your aims.
Proactive planning is important in navigating potential financial challenges effectively and, crucially, make the most of available opportunities.
Whether it’s optimising your superannuation, planning for the future of your estate, or reviewing your asset values, these four EOFY financial planning considerations will help maximise your investment returns and achieve your future financial goals.
1. Superannuation planning
Superannuation remains a cornerstone of retirement planning in Australia, and EOFY presents an ideal time to review your superannuation strategy. Our superannuation experts outlined several key reminders for self-managed superannuation funds (SMSFs) in their recent Super News.
Enhancing concessional contributions
Maximising your concessional contributions before 30 June 2024 may prove beneficial, with more generous tax rates and thresholds starting from 1 July 2024. If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years.
If your total super balance was below $500,000 as of 30 June 2023 and you’ve accrued unused concessional contributions from the past five financial years, consider the opportunity to utilise catch-up concessional contributions.
- It is worth noting that this year marks the final chance to leverage any unused contributions from 2018/19, as they expire after 30 June, 2024. To utilise your unused concessional contribution cap from 2018/19 before the end of this financial year, your Total Super Balance (TSB) of all your funds at 30 June 2023 must be less than $500,000
- For those managing a SMSF, there may be an opportunity to claim a tax deduction in this financial year while allocating the concessional contribution towards the next financial year. Commonly called a reserving strategy, contributions made after 1 June and before 1 July, for instance, can count towards the member’s concessional contribution cap for the next financial year, provided they are allocated within 28 days, i.e. before 28 July It is important that the SMSFs trust deed provides for this strategy, before the contribution is made.
Considering the increase in the concessional contributions cap from $27,500 to $30,000 for the year ending 30 June 2025, it may also be wise to review or establish a salary sacrifice agreement for the 2024/25 financial year. Individuals aged 67 to 74 may also be eligible to make voluntary contributions under the work test exemption, providing an opportunity to boost retirement savings.
Enhancing non-concessional contributions
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Consider various options to maximise non-concessional contributions within your total superannuation balance. From 1 July 2024, the non-concessional contribution cap will rise to $120,000 or $360,000 under a bring-forward arrangement.
By adhering to the annual cap for non-concessional contributions (currently $110,000) without activating the bring-forward arrangement this financial year, you retain the flexibility to make a non-concessional contribution of up to $360,000 in the subsequent financial year.
Depending on your personal circumstances, you may also be eligible to receive the government co-contribution of up to $500 when you make non-concessional contributions.
If you are contemplating making additional superannuation contributions before 30 June, contact your BDO adviser.
Supporting your spouse’s superannuation
Contributing up to $3,000 to your spouse’s superannuation, provided their income is less than $40,000 this financial year, may render you eligible for a tax offset of up to $540. This may offer a mutually beneficial arrangement for supporting your partner while reaping a tax benefit.
You may also have the opportunity to split eligible contributions made during the year ended 30 June 2023 with your spouse, which can play a part in managing superannuation balances between spouses.
Review income stream opportunities
You may like to explore your eligibility for a retirement phase income stream so you can benefit from tax-free investment returns. Whether you’re supporting a transition into retirement by supplementing your income on reduced working hours, or starting an account-based income stream through your SMSF, there are many options to consider that are beneficial from a tax perspective as well as for your future lifestyle preferences.
You can find out more about income stream opportunities from your BDO adviser, or on the ATO website.
2. Estate Planning
Estate planning is a crucial aspect of financial management that should not be overlooked.
Review your estate plan to ensure that it reflects your current circumstances and intentions. This may involve updating beneficiary nominations or reviewing will and enduring powers of attorney or guardianship.
Seek professional advice to ensure that your estate plan is comprehensive and aligned with your wishes.
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When reviewing your estate plan, you may like to consider strategies to minimise estate taxes and maximise wealth transfer to beneficiaries. This may involve withdrawing funds from your superannuation and recontributing it back to create a more favourable outcome for your beneficiaries.
3. Capital gains management
Assess any capital gains you realised this financial year and consider whether offsetting them by selling investments in a capital loss position is beneficial for your circumstances.
On the other hand, deliberately delaying the sale of investments with potential capital gains until the subsequent financial year may help to manage your tax liability more effectively.
4. Prepayment of deductible expenses
Depending on individual circumstances, you may consider prepaying 12 months of interest and accelerating tax-deductible expenses to this financial year.
This can encompass work-related expenses, investment property maintenance costs, charitable donations, and income protection policy premiums.
These strategies can reduce your taxable income in the current financial year.
How BDO can help
Planning for the future can be difficult and sometimes overwhelming. To help you prepare for the future you desire, we created a Retirement Planning Guide and Checklist to help you get started.
This guide outlines the retirement journey and provides you with key concepts to support you in preparing a retirement plan, including a detailed checklist to kick-start the process.
Given the intricate nature of evaluating individual circumstances, it is vital to seek professional financial guidance before acting on the information provided.
Whether you’d like to discuss specific tax opportunities or set your beneficiaries up for the future, our Private Wealth advisers can support you with tailored advice to your personal situation and values.
Reach out today for a no-obligation chat to learn how we can support you.
