4 Ways You Can Pay Less Tax with Your Retirement Plan

If you can implement strategies that can reduce the amount of tax you pay as part of your retirement plan, you’ll have more money to spend on your other needs – and wants! This could include, day-to-day living costs, travel and so on. 

Superannuation is usually the most tax-effective investment structure available to Australians.

However, super contribution and access rules are impacted by resident status.

This article will discuss what you can do today to save money on taxes later in life. With tax minimisation as a primary aim, you may be able to have more retirement income.

Ready to plan for the retirement lifestyle of your dreams?


Here are 4 tax-efficient techniques for personal retirement planning:


1. Consider Obtaining Life Insurance Through Your Super if Personal/Wealth Protection is Required


Most super funds provide the option of purchasing life insurance through them. There are many pros to purchasing life insurance cover through your super fund, however, there are also cons that could mean it isn’t the right choice for you. 

Superannuation and insurance can be quite complex to navigate as an individual.

It may be worthwhile consulting these pros and cons with an expert financial adviser, such as one from the team at Poole Advisory who specialises in insurance advice and wealth protection. 

Life insurance premiums are often cheaper when purchasing insurance through your super fund since they buy insurance policies in bulk.

The premiums are also often withdrawn from your super balance (in some instances, your employer may finance a portion of the cost as an employee perk), so you’ll need to carefully assess how your insurance will impact the money you have available for retirement.

However, with proper preparation, you may still maximise your retirement savings while benefiting from the tax advantages of purchasing insurance via your super. 

Owning insurance via your super isn’t just for industry or retail super funds. You can also do this through your self-managed super fund (SMSF) albeit, the process is a little different.

On the topic of life insurance, if you have income protection insurance held outside of your super, you may be able to claim a tax deduction for this too.


2. Make Voluntary Contributions to Your Super

Most Australians’ super balances will usually be made up of compulsory employer contributions (super guarantee) which is currently a minimum payment of 10% of your salary. 

To make the most out of your super (and to utilise a tax-effective strategy) you may want to consider making extra voluntary personal contributions to your super, such as:

  1. Concessional Contributions: You can contribute up to $27,500 to your superannuation fund pre-tax (this increased from $25,000 to $27,500 on 1st July 2021). It’s important to keep in mind that this cap includes the compulsory aforementioned contributions made by your employer and other contributions, such as a salary sacrifice agreement.
  2. Catch-up Concessional Contributions: The current catch-up concessional contribution rules allow you to make extra concessional contributions – above the general concessional contributions cap – without having to pay extra tax. This can mean you end up receiving more of a tax refund at the EOFY.

You can only make these catch-up concessional contributions:

  • If our total super balance is less than $500,000 on 30 June of the previous financial year. 
  • If you are aged 67 or over, you’ll generally need to meet (or be exempt from) the work test.

Additionally, you can only carry forward unused concessional contribution cap amounts from 1 July 2018 and unused cap amounts can only be carried forward for five years until they expire.

If you want to learn more about Superannuation contributions and how they can benefit you, check out our article on4 Tips to Make the Most of Your Superannuation.

  • If you are an overseas resident for tax purposes:

    Keep in mind that super contribution rules are impacted by resident status. You can still make contributions and you are still eligible to make personal deductible contributions to your super.

However, you must have sufficient Australian sourced assessable income against which to claim the tax deduction.


3. If You’re A Small Business Owner Heading into Retirement, Look at Small Business Concessions

When business owners sell their business, this business is considered an asset and therefore the proceeds of the sale are subject to capital gains tax.

However, there are various CGT concessions available to small business owners. Correctly applying these concessions may reduce your CGT liability when selling a business.

Some of these concessions that may apply to you:

  • 15-year exemption: if you have owned your business for at least 15 years, you may be exempt from paying CGT
  • Retirement exemption – that allows you to receive relief from CGT if you sell assets called ‘active assets’ used in your business. However, the exemption does not apply to gains made from passive (investment) assets


4. Review Your Investment Strategies for Opportunities to Save Tax

As you head into retirement, it is the perfect time to review your investment portfolio for any tax-efficient opportunities. 

It may be time to restructure and cut investments that are causing you a loss. 

It also may be time to consider your investment timeline. Retirement is a time when you may need quick access to cash as you no longer have your salary to rely on.

For this reason, whether you still have your super fund or SMSF invested, it’s a great time to speak with an Investment Advisor about your strategies – now and for your golden years.


Seeking a financial planner to help you legally minimise tax for retirement?

Poole Advisory can support you with tax planning advice and help you claim your maximum tax deduction.

At the end of the day, it’s good to know that you can reduce your taxes and increase your retirement savings.

It’s important to keep a close eye on the regulations that could impact your super to ensure you take full advantage of all the tax benefits.

If you’re looking to reduce your taxable income now and in the future, consider talking to a financial adviser about the following:

  • What tax offsets are tax concessions are available for you
  • Whether an investment property can help your tax efficiency as part of your investment portfolio (you may be able to benefit from a gearing strategy or enjoy capital gains tax benefits)


Are you looking for a retirement planner in Syndey who can help you with tax minimisation and tax planning strategies?

At Poole Advisory, we can help you plan, protect, and grow your retirement savings and investments. 

Book a complimentary meeting today!


Compliance Disclaimer: 

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917

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