The EOFY is rapidly approaching, and for 2024, we’d suggest focusing on these three points in particular – especially in the face of the forthcoming Stage 3 tax cuts:

  • Understanding indexation and what effects it has
  • Superannuation contributions
  • Salary sacrificing

Superannuation Considerations For The EOFY

Again, the Stage 3 tax cuts will be arriving on 1 July 2024, so you can make significant tax savings by contributing to your superannuation while the marginal tax rates are still high. From this date, the non-concessional is going to rise to $120k and the concessional cap to $30k, so this will make tax-favourable super contributions a lot easier – as such, you’ll want to act now so you can benefit from the higher marginal tax rates we currently have.

What Can I Do With Unused Concessional Contributions?

You can actually carry any of your unused concessional contributions from the previous five years forward so long as your TSB was under $500,000 last financial year thanks to the ATO’s rules here.

As a result, this enables you to make more contributions to your retirement savings, and we’d strongly recommend doing this if factors like being out of work kept you from making contributions in the past.

Understanding Stage 3 Tax Cuts

The Stage 3 tax cuts starting from 1 July 2024 are going to lower the marginal tax rate for the majority of people, which means you’d do well by putting some of these savings in your super instead.

With that in mind, the Super Guarantee rate also rises to 11.5% on that same date and again to 12% the same time next year.

Financial Planning Adjustments

The tax cuts and super changes require a review of financial strategies. Adjusting super contributions, revisiting salary-sacrificing arrangements, and utilising tax offsets and deductions become crucial. 

As an example, those earning $190,000 will end up saving $4,529 annually, which can then be put towards super contributions, debt reduction, or other financial goals.

Options for Tax Cut Windfall

  • Enjoy your money: Use extra cash to alleviate living costs or treat yourself.
  • Review insurances: Adjust personal insurance for better coverage.
  • Pay down home loan: Extra payments can reduce interest and allow you to pay off loans sooner.

Indexation and Salary Sacrificing

  • Salary Sacrificing: Redirect pre-tax income into super to reduce taxable income and benefit from the 15% super tax rate, optimising retirement savings before the tax cuts take effect.
  • Pre-Pay Deductible Expenses: Bring forward tax deductions to lower taxable income for the current financial year.

Plan More Efficiently With AdvisoryOne

To ensure you’re utilising the Stage 3 tax cuts and your super the most you can, don’t hesitate to opt for some extra help from a team of professionals. Get in touch with our certified bookkeepers and chartered accountants today at 02 6324 5888 to learn more!