Traditionally 5 Financial’s recommendations for superannuation splitting have been based on moving contributions to the older person in a couple to maximise tax free superannuation benefits sooner.
As a result of the recently announced changes in the federal budget we have had to alter our strategy. The Government announced in the budget that they would allow those over 50 to still make maximum tax deductible super contributions of $50,000 to super as long as their balance was less than $500,000. As is generally the case, those with the higher income requiring larger tax offsets have the higher super balance.
Even though the tax free benefits for the partner reaching 55 sooner are strong, in many cases we expect the benefit of being able to make $25,000 of additional tax deductible contributions each year is greater. This ability creates an additional net benefit after contributions tax of approximately $5,000 p.a. on average.
Changes for clients regarding superannuation contributions splitting
We have been working behind the scenes analysing all balances and incomes to determine an appropriate recommendation for everyone and will have our individual recommendations out in the first half of June.
Even though you may not have reached 50 yet, this is a strategy that needs to be adopted early so you aren’t disadvantaged when you reach 50.
By not acting early, you run the risk of missing out on between $50,000 and $70,000 in benefits between 50 and 60.
Contact us if you would like more information about superannuation contributions splitting.
If you are not currently a client of 5 Financial, feel free to book a complimentary, no-obligation consultation with one of our experienced advisers. This will enable you to get a quick feel for if and how you can benefit from superannuation contributions splitting, as well as other important facets of your wealth building. Contact us today to schedule a time at your convenience.