Dollar Saver Tip #35
Save: $1000+
Tip overview:
You've only got 2 weeks left to make a tax-deductible contribution into your super fund this financial year.
Super contributions are taxed at 15%, which is likely to be a lot lower than your income tax rate if you work full time.
If you make a voluntary super contribution, you can claim a tax deduction to get back the tax that's already been withheld on the money.
Let's say you earn the median Australian salary of $65,000. Your employer has already paid you the 10.5% super guarantee of $6,825. You can make an additional $20,675 worth of concessional contributions for the financial year.
Did you know?
You can contribute up to $27,500 worth of concessional contributions per year into your super fund (these are taxed at the lower rate of 15%). The super guarantee is included in this limit.
With a $65,000 salary, your income tax rate is 34.5 cents for each dollar above $45,000 (including the Medicare Levy).
If you made a super contribution by 30 June, that money would instead be taxed at 15% and you'd make a tax saving of 19.5 cents for each dollar you contribute.
If you contributed the full $20,675 to your super, that's $4,031.62 back in your tax return. A $10,000 contribution would save you $1,950 on tax, and a $5,000 contribution would save you $975.
You need to make the contribution and lodge a 'Notice of intent to claim' form with your super fund before 30 June for it to count towards your tax return this year.
Yes, you're spending money initially, but your net income overall for the year would be higher by taking advantage of this tax incentive. Plus, you're boosting your retirement balance at the same time.
If you can't afford to contribute extra to your super right now you can still boost your super balance by switching to a low-fee, high-performing super fund.