With the end of the financial year fast approaching, some of us are thinking about wrapping things up neatly in a bow and making sure we don’t get stuck with an unnecessarily large tax bill. But for others, the end of the financial year is a beginning.

This is especially true if you have a big tax event on the horizon that a charitable donation might help to mitigate. When you’re thinking about giving, and the impact your donation will make in the community, it’s a good feeling. Most people who give, get enormous satisfaction knowing that they’re supporting positive change.

So, could this be the beginning of a more structured approach to giving? Could it be the beginning of a family tradition and the establishment of a legacy that can live on for generations? Why not? You don’t have to have Bill Gates’ billions to get involved with philanthropy. With the rise in popularity of public ancillary funds, structured giving has become simpler and more accessible. In fact, you can establish a sub-fund with a number of public ancillary funds with as little as $25,000.

The end of the financial year can also be the beginning of other good things.

For example, tax time can get you thinking about your super more than you usually would. That’s potentially the beginning of a habit that could really help you in the long run.

Making personal tax deductible contributions to super prior to June 30 is a popular strategy. Not only will they provide a tax deduction, they can also give your retirement savings a handy boost.

The total of personal deductible and employer contributions (often collectively referred to as concessional contributions) is limited by an annual cap. In the current year, the concessional contribution cap is $27,500. You could top up your contributions to this cap.

But what about those people who have a very high income? Well, sometimes it’s possible to contribute more than the $27,500 cap. This is due to catch-up concessional contributions. Since the 2018/19 financial year, any unused contributions can be used in a later year. If you haven’t used all your cap in the past 5 years, you may have the ability to claim a deduction of well over $27,500 this year.

Here‘s an example of how that works.

Amy has a $90,000 taxable capital gain from selling her rental property. Her employer pays $10,000 per annum into her super. Over the previous three years, she hasn’t personally contributed anything extra. As the cap was $25,000 in the first three years and $27,500 for the last two completed years, Amy has unused contributions totalling $80,000. This year, Amy’s employer also will contribute $10,000, and the cap is $27,500, which gives her a further $17,500.

In total, Amy can put up to $97,500 into her super fund and claim it as a tax deduction. This would be more than enough to offset her capital gain.

It should be noted that this catch-up is only available to those who have a total super balance of less than $500,000 as at 30 June 2023. But if you think you might qualify, talk to your adviser.

We’ve all heard the expression ‘the more you think about it, the bigger it gets.’ Well, that’s potentially true for superannuation. The more it’s front of mind, the more likely you are to take action, make timely adjustments and take advantage of opportunities.

What might your new beginning be when the financial year comes to an end? Whatever it is, start planning now. Speak to your adviser or get in touch with our Head of Philanthropic Services Susan Chenoweth if you would like more information on creating a structured approach to giving.

If you would like more information please call 1300 ELSTON or contact us.