Money Matters | Super Tax Saving Options | West Central Daily

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There’s a lot going on right now – the federal election, rising interest rates, the war in Ukraine. There are also less than eight weeks left before the end of the fiscal year. Now is the time to think about tax reduction strategies. The retirement pension offers the greatest number of workers the possibility of reducing their tax bill or of benefiting from a refund. This can work for people who are looking for tax savings over their regular salary. It can also help people with abnormally high incomes this year. This could include people who sold property or shares for a large capital gain, and self-employed people who simply had an exceptionally successful financial year. Some super contributions are tax deductible, called concessional. Tax benefits can come from lump sum contributions or salary sacrifices through an employer. The annual contribution limit is $27,500. Employers pay 10% of salary, for example $7,500 for someone earning $75,000 a year. This means the worker could contribute up to an additional $18,000 to the super. This could net a tax refund of around $6,000. People with unused savings could put a lump sum into super and claim the tax deduction. Alternatively, they could ask their employer to sacrifice all of their pay to the super for the remainder of that fiscal year and live off their savings. People who need a very large deduction can catch up on missed contributions if they haven’t made the maximum allowed in the previous three years. If their total super balance was less than $500,000 as of June 30 of last year, a tax deduction of $50,000 or more may be possible, if the person can use it. This could significantly reduce a capital gains tax bill. Super contributions for a low-income spouse may earn the contributor a tax refund. If a person contributes $3,000 for a spouse who earns less than $40,000 a year, they will receive a $540 rebate on their tax bill. Anyone earning less than $41,112 a year can also earn a free $500 contribution to their own government super account, if they contribute $1,000 themselves and don’t claim a tax deduction for it. Non-tax-deductible contributions are also allowed – up to $110,000 per year. Those under age 67 can also advance contributions for two future years, for a total of $330,000. It makes sense to contribute large amounts to the retirement pension because, upon retirement, super pensions are fully tax exempt. There is no tax on account earnings or pension payments to the retiree. Superannuation contributions must be in the fund by June 30 and time should be allowed to ensure they are recorded.

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