While historically only available to the self-employed, the use of deductible super contributions to top up retirement savings is a hot option for clients given 2017-18 is the first full financial year is has been offered.
BT Financial Advice’s (BTFA’s) technical team recorded 4,500 queries from financial advisers in the period from April to June this year, with deductible super contributions the leading topic.
Technical consultant, Tim Howard, said the spike in queries for the June quarter was likely due to clients considering super as part of their end of financial year strategies.
“Clients can use this strategy to top up their super contributions before the end of financial year if they remain under the concessional contribution cap limits,” he said.
“Clients are able to contribute, if they choose, $25,000 per year in pre-tax money towards their super, inclusive of the Superannuation Guarantee and salary sacrificed contributions.”
Howard added that personal super contributions could allow clients that are now employed to claim a deduction for personal contributions if they meet the eligibility criteria, which is now easier to reach given the 10 per cent maximum earnings test has been removed.
The consultant stressed it was important for clients to keep in mind that all other existing rules remained the same.