Save on Tax by Thinking About Your Super in a New Way
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.
Here’s what you need to know.
How do I contribute?
You can make contributions from your savings, the sale of an asset or an inheritance. Make sure you lodge a ‘notice of intent to claim’ form with your super fund before you begin.
You can claim a tax deduction on your after-tax super contribution. Your deductions will only incur a 15% tax if you earn less than $250,000 a year, or 30% if you earn more than $250,000. If you receive extra cash that you don’t urgently need to meet your current expenses, consider putting it into your super so that you pay a lower rate of tax on it.
How much can I contribute?
You can contribute up to $25,000 per year under the concessional scheme (including contributions paid by your employer into your super fund). Anything more than that will attract penalties.
Does my age matter?
Anyone can access the super concessions, however if you’re over 65 you will need to show that you’ve been employed for over 40 hours over a period of 30 consecutive days in the last financial year.
What should I do now?
Talk to your accountant to get advice about how much in extra contributions you can afford to make and need to make to meet your retirement goals. First and foremost, make weekly contributions to take advantage of compound interest. With the rates of return available in super funds, this compound effect can leave you with significantly more money to retire on than monthly or quarterly contributions. Weekly payments also allow you to manage your budget more accurately.
Contact us if you would like advice on how to get a better tax result through your super contributions. Contact John from Sciacca’s Accountants on 07 3357 5553 or email firstname.lastname@example.org