It’s only one month until the end of the financial year and many Australians are scrambling for ways to pay less tax. Here are five tax saving strategies that you can employ with your superannuation that will put more back in your pocket.
1. Salary sacrifice
Arrange with your employer to make personal contributions to your super straight from your pre-tax salary. This will reduce your taxable income, putting more money in your back pocket and will of course boost your super balance in the process. Just make sure that your personal and employer contributions don’t exceed the $25,000 concessional contribution cap, as any amount over this cap will be taxed at the top tax bracket.
2. Boost your super
Transfer some of your savings into super as a lump sum and claim a tax deduction. Note that this is only an effective strategy if you haven’t yet reached $25,000 concessional contributions cap, as any amount over this cap will be taxed at the top tax bracket.
3. Split with your partner
You can now allocate part of your super contributions to your spouse, providing you don’t exceed the $25,000 concessional contributions cap. This way, you’re bolstering up their balance and helping keep a lid on yours. The closer you can make your super balances, the more tax effective you’ll be in retirement too.
4. Grab the super government top-up
For those who earn less than $51,813 and more than 10 percent of your income is from employment (i.e. not investment income) the government will match your after tax super contribution up to $500. That’s free money you’d be silly to turn down.
5. Claim a tax offset for your spouse
If your spouse earns less than $37,000, you can contribute up to $3,000 to their superannuation fund and get a $540 tax offset for your own return. Note this is a tax offset, not a tax deduction, so you get all $540 back as either a return or as a reduction in the amount of tax that you must pay.
We highly recommend you seek the services of a good, qualified accountant to maximise your tax deductions. A good accountant will take the time to understand your personal situation and how you derive your income. This will help them to establish what deductions you’re entitled to, rather than simply plugging information into an online form. As you develop a relationship with your accountant, their understanding of your current circumstances will improve and so should your return. They will also be able to give you advice should you wish to make any changes to your circumstances, such as moving from full time permanent employment to contract work or changing your business structure from being a sole trader to operating as a business.