We often forget that it’s the little things we do over time that make a difference.
This series of $10 tips give some simple ideas which you can use to improve your financial affairs for the cost of only two cups of coffee a week.
[heading]Tip 20: Making a $10 tax deduction into Super[/heading]
Many people don’t understand that they may be able to claim a tax deduction for contributions that they personally make into their Superannuation.
The rule here is that as long as less than 10% of your total income is paid from an employer who contributed into Super, then you can make contributions up to the contribution limit and claim a tax deduction for that contribution.
Let’s look at an example
Say you have a part-time salary of $12,000 and you sell an investment property, which has an assessable gain of $100,000.
Your total income will be $112,000 with your income from your employer representing 10.7% ($12,000/112,000) of your total income. In this case, you are not eligible to make further contributions and the employer contribution of $1,110 (9.25% of $12,000) will be all that you can pay into Super.
If, on the other hand, your income from employment was $10,000 such that this income now represents 9% ($10,000/$110,000), you could make a tax deductible contribution into your Super of up to $34,075 ($35,000 – $925 employer contribution) if you are over 60 and $24,075 if under 60 years of age.
How does it work?
Making tax deductible superannuation contributions can be an effective way to make use of surplus income.
What do I need to do?
Superannuation is a complex financial structure, so talk to us and see if tax deductible contributions are of benefit to you. Give Debbie a call on (02) 4941 6000 to arrange an appointment.