Now that it’s time to put in your tax return for 2018-19, you’re probably looking at all the usual deductions to claim: bodycorp, rates, water, training, uniforms. However, one of the most overlooked deductions you can make is on after-tax super contributions. Not only does it reduce your tax burden in the present, it sets you up for a more comfortable life in the future.
You can make personal super contributions to your superannuation fund and claim it in your income tax return as an income tax deduction.
How does it work?
The best way to explain it is by an example. Steven is employed as an IT Consultant. During the 2017-2018 financial year, he earns a salary of $78,000.00. Steven makes a personal super contribution of $3,000.00 to his superannuation fund.
If you’ve been watching the news lately, you might have heard that the change in franking credit rules is going to break open the earth and swallow our retirees whole.
Or if you’re listening to the other side of politics, it won’t. So who’s right? Who’s wrong? What’s a franking credit? Let’s start with that. A franking credit is used by the Government to avoid you paying tax twice on dividends from shares. Say you invest in a company like Google. Hang on, this article is about paying tax :). Say you invest in a company like John’s Global Meat Pies. John’s Global Meat Pies pays you $700 in dividends after paying $300 in tax on that amount ($1000 in total).
JUNE 30 DEADLINE APPROACHING
ARE YOU READY?
If you’re not already paying super using SuperStream it’s important you get started! All employers need to use it when paying super.
There are a number of options you can choose to implement SuperStream. Depending on what works best for your business, you can choose from:
- your super fund’s online system
- a clearing house
- a payroll system that is SuperStream ready
- a messaging portal
If you’re not sure what solution is best for you, we can help.
The ATO also offers the Small Business Superannuation Clearing House as a free online service you can use.
To assist you get ready, take a look at the step-by-step checklist available on the ATO website.
Here’s what you need to do if you haven’t set up yet: