June 2022 Market Update
June 9, 2022
Markets have continued to sell off although it may surprise some that May actually showed a slight gain for US stocks. The Australian market has fared comparatively well due to the higher weighting to commodities which have benefited from the Ukraine related resource shortages.
Financial Year-end Super contributions
With the financial year end approaching it is important to review your Super contributions strategy and your ability to maximise the deductible concessional contributions of $27,500.
Remember your employer will only be contributing 10% of your salary to super so it is up to all of us to contribute additional amounts by salary sacrificing and the like. The easiest way to invest the remainder is by making a ‘Personally Deductible Contribution’ from your bank account when you know what headroom you have left under the $27,500. These days this can be done as a simple BPAY or Electronic Funds transfer to your Super account.
Catch-up concessional contributions
For those whose Super balance was lower than $500,000 on 30 June 2021 then you also have the ability to ‘catch up’ on the unused concessional caps from 2019, 2020 and 2021 years.
This can often result in a generous tax benefit and a healthy injection for your Super balance. With the recent cost of living increases, the challenge may be coming up with the cash to make the contribution.
The other issue may be determining how much you can catch up on previous years. Rest assured ‘Big Brother’ has already been keeping these records for you on your Mygov website.
MyGov / ATO / Super / Information / Carry-forward concessional contributions.
For those whose Super is in the pension phase, it is also important to make sure you pay yourself the minimum pension before the year-end. The current minimum amount is based on the pension balance at the start of the year and depends on your age as follows:
Age Pension Min
Under 65 2.0%
65 – 74 2.5%
75 – 79 3.0%
80 – 84 3.5%
85 – 89 4.5%
90 – 94 5.5%
Over 95 7.0%
Federal Election – Changes
The incoming government chose a small target approach and did not rock the boat with material changes to Super this time around. Some promises that may benefit some clients include
Commonwealth Seniors Health Card – More clients that are over Aged pension age will be eligible to receive the CSHC. The maximum amount a couple can earn will be increased from $92,416 to $140,000. For a single, the income test has been increased from $57,761 to $90,000.
This card is particularly useful for Pharmacy and medical costs but may also help with the increasing costs of utilities. In practice, the new maximums will include most clients who are no longer working.
Downsizer eligibility – In our last newsletter, we noted that those over 65 can contribute $300,000 into super following the sale of a home they have owned for more than 10 years.
The eligible age for this was to reduce to age 60 from the 1st of July 2022. The proposed eligibility is now from age 55. This is an opportunity for those in this age bracket who have seen the children move out of home and no longer need a large house.