Save tax by contributing extra $ into super

You can save tax by contributing additional $ into super (Conditions Apply)

You can make extra contributions in 2 ways

1- through your employer i.e. salary scarifice

2- yourself i.e. pay directly into your super fund and claim a tax deduction at item D12 on your personal tax return. You must provide a notice of intent form to your super fund to claim a deduction on or before whichever of the following days occurs earliest, either:

• the day you lodge the relevant tax return
• the last day of the income year after the income year in which you made the contributions. In saying that do not leave this until the last minute as your fund will require notice

Scenario 1:

John's taxable income is $110,000

John's marginal tax rate is 32.5% plus 2% medicare levy

Concessional super contributions are taxed by the fund at 15%

Equals 19.5% Tax Saving (34.5% - 15%)

So for every $1,000 John contributes he saves $195 tax

Conditions apply - see notes below

 

Scenario 2:

Sue's taxable income is $140,000

Sue's marginal tax rate is 37% plus 2% medicare levy

Concessional super contributions are taxed by the fund at 15%

Equals 24% Tax Saving (39% - 15%)

So for every $1,000 Sue contributes she saves $240 tax

Conditions apply - see notes below

 

Scenario 3:

Tom's taxable income is $40,000

John's marginal tax rate is 19% plus 2% medicare levy

Concessional super contributions are taxed by the fund at 15%

Equals 6% Tax Saving (21% - 15%)

So for every $1,000 John contributes he saves $60 tax

Conditions apply - see notes below
 

Notes:

1- If your Adjusted Taxable Income (ATI) is above $250,000 ALL concessional super contributions will be subject to the additional 15% Division 293 tax
2- Depending on your age you may need to pass a work test
3- Concessional Contributions Caps apply
4- You can use prior year unused concessional limits conditions apply
5- You cannot withdraw funds out of super until you satisfy a condition or release eg reaching retirement age
6- Individual Tax Rates
7- The extra contributions MUST hit the super fund's bank by 30 June so we recommend paying it by 18th June
8- Taxable Income = wages plus other income eg bank interest less work related expenses, donations, concessional super contributions etc
9- Extra super payments will lower your Taxable Income BUT they will be added back to your Adjusted Taxable Income (ATI)
10- If you choose not to claim a tax deduction the extra contributions will be treated as non-concessional contributions (limits apply)
11- If you are a low or middle-income earner and make personal (after-tax) super contributions to your super fund, the government also makes a contribution (called a co-contribution) up to a maximum amount of $500

Disclaimer

The information contained within this blog article is of a general nature only and does not take into account your individual circumstances.

We recommend you speak to us for tax advice and/or a licenced financial advisor for financial advice before making any contributions into super

If you do not have a financial planner we recommend

Ben Graham-Nellor
Smart Happy Money

Suite 1/18-20 Floriston Road, Boronia VIC 3155
1300 592 539
ben@smarthappymoney.com.au
www.smarthappymoney.com.au