Are you looking for ways to get the most of the potential tax benefits available inside super or to rebuilding your superannuation savings? Then, the lead up to 30 June is a great time to act. Luckily, to help you understand how you can take advantage of and maximise tax benefits Syndeo Group – the leading accounting firm in Brisbane providing ultimate financial assistance services – has come up with the following list of specific contributions that may help you reduce your taxable income.
Just read on and get your financial balance in check:
- Tax-Deductible Super Contributions
First and foremost, you have to understand that the deadline for claiming tax deductions on after-tax super contributions is 30 June. To do so, you have to file out a notice of intent so that you let your super fund know. Generally, this notice should be lodged and acknowledged by your super fund prior to filing a tax return for the year.
This is an extremely beneficial strategy if you want to avoid paying taxes on some extra income you’ve received. So, by putting that money into super and then claiming it as a tax deduction, you won’t exceed your personal income tax rate.
- Government Co-contributions
Next, those who are classified as low or middle-income earners and have made an after-tax contribution (before 1 July) to their super and don’t claim a tax deduction for it, may be qualified for a government co-contribution that may be up to $500.
Briefly put, if a person earned less than $39,837 during the 2020/21 financial year and made $1,000 after-tax contributions to their super fund, they will be eligible for the maximum $500 co-contribution. And, if the income for the 2020/21 financial year exceeds $39,837 but is lower than $54,837, the co-contribution reduces as the income rises.
- Spouse Contributions
Here’s yet another way you can reduce your taxable income but only if you earn more than your partner and want to help and add money to their retirement fund. Hence, if you are qualified for contributing to your partner’s super fund, you can claim an 18% tax offset on a maximum of $3,000 in your tax return.
However, your partner’s income for the 2020/21 financial year has to be up to $37,000 to be able to get the maximum tax offset of $540 by contributing $3,000. If their income is higher than $37,000 but lower than $40,000 you can still be able to get a partial offset.
- Salary Sacrifice Contributions
Finally, having part of your before-tax income transferred to your super by your employer, regardless of the money they pay under the superannuation guarantee, is called salary sacrifice. These contributions are considered concessional contributions and are taxed at 15% which means that you will eventually pay less tax on your super than on your income.
If your financial balance allows you to make a salary sacrifice agreement, you have to do so before the new fiscal year begins. Therefore, ensure you seek professional financial assistance from the number one Syndeo Accountants to get the best advice and service possible.