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Simple super tips before 30 June.
Date: Wednesday, 26th March, 2008. Source: MLC/Garvan Financial Planning.
Believe it or not, the financial year end is fast approaching. Get a head start on the tax season with these simple super tips.
By putting more money into your super before 30 June, you can take advantage of tax benefits that may not be available to you otherwise. For example:
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Salary sacrifice. Undoubtedly you would have heard this term used a number of times, but it’s not about sacrifice, rather about investing a portion of your salary, at a better tax rate, into your super fund.
The beauty of this strategy is you pay less tax because your super contribution is taxed at a maximum rate of 15%. This could be much better than your marginal rate, which may be up to 46.5%*.
You can even use this strategy for any bonuses you receive.
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If you are self-employed† or not employed‡ you may be able to claim your personal super contributions as a tax deduction.
The more you do this, the less taxable income you receive, which reduces the overall amount of tax you pay.
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If you earn less than $58,980§pa and make personal after-tax super contributions, the Government may contribute up to $1,500 into your account.
A key restriction is that you earn at least 10% of your income from eligible employment or carrying on a business.
Also, once the money is invested in super, earnings are taxed at a maximum rate of 15% (not your marginal rate) and no tax is payable on super benefits received at age 60 or over§.
So when you add it all up, it’s no wonder super is regarded as one of the best places to save for your retirement.
Consider the caps
Before you decide to invest in super, you need to be aware that caps apply to different contribution types and penalties may be payable if you exceed the relevant cap. You also need to consider that super contributions generally can’t be accessed until you retire.
For more simple tips to take advantage of before June 30, go to www.mlc.com.au and download the Super Living 2007/2008 booklet.
- Notes:
- * Includes a Medicare levy of 1.5%.
- † To qualify as self-employed, you must earn less than 10% of your assessable income plus reportable fringe benefits from eligible employment.
- ‡ To qualify as not employed, you cannot receive (or be eligible to receive) super contributions from an employer.
- § Includes assessable income plus reportable fringe benefits.
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