As the financial year comes to a close, it’s the perfect time to think about generating tax deductions while boosting your retirement savings. One excellent way to do so is by contributing to your super, provided the total amount does not exceed $27,500, including your employer’s contributions.
Making personal contributions to your super fund can be a great option for generating tax deductions while increasing your retirement savings. You can claim a tax deduction for your personal contributions as long as the total amount, including those made by your employer, does not exceed $27,500. To claim a deduction, the payment must be made by June 30, and you must notify your super fund that you have made the payment when you lodge your tax return. The ATO provides a standard form for this purpose, which you can find here.
If you are between 67 and 74 years old, you must pass the work test to make a tax-deductible contribution. This means that you have to work for at least 40 hours in a consecutive 30-day period in the financial year to make contributions.
You can also make contributions from investment income, including dividends or rental income, and capital gains.
It’s worth noting that a 15% tax is deducted from any contribution claimed as a tax deduction. However, if you’re a 45% taxpayer and contribute $10,000, you’ll generate a tax deduction of $4500 in your personal tax return. The $10,000 contribution will then be taxed at 15% in your super fund, resulting in an overall tax saving of $3000.
To learn more about maximizing your retirement savings while generating tax deductions, contact your accountant or financial advisor. They can provide you with expert guidance on how to complete the necessary forms and help you make the most of your contributions.
In conclusion, contributing to your super is an excellent way to boost your retirement savings while generating tax deductions. Make sure to stay within the contribution limits, notify your super fund of your payment, and consult with one of the Inspired Money Team to ensure you’re making the most of your contributions.
The information provided in this blog is for general educational and informational purposes only. It should not be taken as professional financial or tax advice. We recommend consulting with a licensed financial advisor or tax professional before making any decisions related to your finances or taxes. We do not guarantee the accuracy, completeness, suitability, or validity of any information in this blog, and we will not be liable for any errors, omissions, or damages arising from its use.
This article was written by Conrad Francis, Founding Director and Money Coach with Inspired Money.