The end of the financial year always seems to crop up faster than it should.   Understanding what you could do before and after 30 June 2014 can mean less tax this year.   When it comes to superannuation, make sure you maximise the tax deduction this year or salary sacrifice the right amount so you get the best possible outcome and don't end up with tax penalties.

1) Increased tax-deductible contributions cap for anyone 60 and above

For anyone who is under age 60 this financial year, the maximum amount of tax-deductible contributions that can be made to superannuation without penalty is $25,000.   However, for anyone age 60 and above the maximum amount is $35,000.

These contributions include amounts you may make as salary sacrifice, superannuation guarantee or personal deductible contributions, if you qualify.

If you wish to maximise your contributions before 30 June, make sure you talk to us to ensure the strategy and contribution is tax effective.

If you are older than 65 you will need to meet a work test to contribute to super in most cases.   You will need to work for at least 40 hours during 30 consecutive days at any time during the financial year, to be able to make tax-deductible and non-deductible contributions to super.

2) Claiming a tax deduction for personal superannuation contributions

If you are self-employed, an investor, or in receipt of a pension and receive less than 10 per cent of your income, fringe benefits and other related payments from employment, you may qualify for a personal tax deduction to superannuation.

If you intend to make a contribution, make sure you are eligible to claim a tax deduction under the 10% Test.

You need to notify the fund of the amount you wish to claim as a deduction before the end of the next financial year, that is, before 30 June 2015.

Make sure you keep all relevant paperwork to avoid stress when the time comes to prepare your Return.

3) Making after-tax contributions to super

You can make after-tax contributions to super that could come from your personal savings, transferring personal investments, an inheritance, or from the sale or transfer of investments.

This financial year the maximum personal after-tax contribution is $150,000. However, if you are 65 or older, you can contribute up to $450,000 in one lump sum or over a three-year period.   This allows you to make substantial contributions to super and build up your retirement savings.

The way it works is that if you are under 65 and make total non-deductible contributions of more than $150,000 in a financial year, the "bring-forward rule" is triggered.   This allows you to make non-deductible contributions of up to $450,000 in total over a fixed three-year period commencing in the year in which you contributed more than $150,000.

This may sound like a real bonus, but you need to make sure you don't exceed the after-tax contributions caps because there may be penalty tax payable.   This could be as high as 46.5%.

From 1 July 2014, the after-tax contributions cap increases to $180,000, which means if you trigger the bring-forward rule that a total of $540,000 can be contributed over the fixed three-year period.

One trap that may occur if you trigger the bring-forward rule before 30 June this year is the maximum amount will be $450,000 for the fixed three-year period.   Again, seek advice and avoid the penalties.

4) Beware of excess contributions tax

Anyone making large superannuation contributions should exercise extreme care for any type of contributions, to avoid excess contributions penalties.

This can apply to any tax-deductible and non-tax-deductible contributions made to super.   The maximum amount of tax payable can be up to the maximum tax rate of 46.5% plus additional penalties at the discretion of the ATO.   Changes were introduced in the Budget but these don't apply until next year.

5) Government co-contribution

If your adjusted income is less than $48,516 you may like to take advantage of the government co-contribution.   You can do this by making after-tax (non-concessional) super contributions before the end of the financial year.

For every dollar of contributions that are eligible, the government contributes 50 cents to your superannuation up to a maximum government co-contribution of $500.

For 2013/14, the maximum government co-contribution is payable for individuals on incomes at or below $33,516 and reduces by 3.33 cents for each dollar above this, cutting out completely once an individual's total income for the year exceeds $48,516.

6) Drawing superannuation pensions

If you are in pension phase, make sure the minimum pension has been paid to you for this financial year.

By not drawing the required minimum pension, any income earned on your pension investments in your superannuation fund will be taxed at 15% rather than being tax-free if the pension rules are met by the fund.

7) Drawing superannuation lump sums

Once you reach 60, all lump sums from superannuation are tax-free.   However, before age 60 any lump sums that include a taxable component can be taxable.

The taxable component includes the tax-deductible contributions plus any income that has accumulated on your superannuation benefit.

No tax is payable on the first $180,000 in total that is received prior to age 60, and 15% on the amount exceeding this.

If you are eligible to draw amounts from superannuation you may like to defer receiving the amount until after reaching age 60 or until a later financial year because it would then be either tax free or a lower rate of tax.

Super is unfortunately full of rules and the tax consequences can be serious.   Please call us and check on the options available to you, whatever you are planning.