Tax Tips: Build Your Super While Saving on Tax

Grow your super while reaping tax benefits during this tax time.

1. Salary Sacrifice Into Super
A simple way to reduce tax is to ask your employer to pay some of your salary into your super.

Check how your employer treats salary sacrifice contributions before putting this strategy in place. Keep in mind salary sacrificing isn’t something employers are obliged to offer.

Concession:

Your pre-tax contribution will be taxed at 15%, at the super fund level, unless you’ve exceeded the concessional contributions cap (currently $27,500 p.a).
If you earn more than $250,000 a year, you may be subject to an additional 15% tax.

2. Government Co-Contribution
Low to middle-income earners may be eligible for a maximum co-contribution of $500 each eligible year.

Concession:

No personal tax implication, because it’s paid into your super.

3. Personal Super Contributions
You can also boost your super by adding your own contributions to your super fund from your after-tax income (a.k.a. your take-home pay).

Concession:

The amount will vary based on your personal circumstances. You may be able to claim personal super contributions as tax deductions.

4. Downsizer Contribution

Selling your home? Individuals 55 years and older may be able to contribute up to $300,000 from the sale of their home into their super.

Concession:

No personal tax implication, because it’s paid into your super.

5. Spouse Contributions
If you have made contributions to your spouse’s super fund or retirement savings account (RSA) during the financial year, you may be entitled to a spouse contribution tax offset.

Your spouse must be under 75 at the time the contribution was made.

Concession:

The maximum spouse contribution tax offset is $540.

6. Super Contribution Splitting
Some super funds let you transfer some of your before-tax contributions to your partner’s super account.

The maximum you can send to your spouse’s account is the lesser of:

85% of your concessional contributions for the financial year; or
The concessional contributions cap for that financial year.

Concession:

Provides superannuation and pays for insurance premiums for your spouse so their super doesn’t fall behind.
This amount won’t count towards your spouse’s cap as it was already counted against your cap when you made the original contribution.

Additional Tips:

Watch out for the super contributions cap.
Once you exceed these caps, tax advantages won’t apply and your super contributions could be taxed at up to 94%.
Get professional advice.
Tax can be complex, so you should consider discussing your personal situation with your accountant, taxation, or financial adviser.

Source: CommBank
Compiled & Edited by Tailored Tax.

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