Superannuation key to tax time
Do you want to make a guaranteed 100% on your money between now and June 30th? Then rush off to your financial adviser and make a non-concessional contribution of $1,000 to superannuation. Provided you meet the eligibility guidelines, the Government will give you a tax-free bonus of $1,000, which will see your $1,000 miraculously turned into $2,000.
The maximum government co-contribution is $1 for every $1 of eligible personal super contributions made in a financial year and is subject to an income test. The maximum co-contribution of $1,000 is reduced by 3.333 cents for every dollar that the taxpayer’s total income exceeds $31,920.
As income rises the co-contribution reduces by $33.33 for each $1,000 of additional income, until it cuts out at $61,920 a year.
For co-contribution purposes you must be less than 71 at the end of the financial year.
Your income is your assessable income plus reportable fringe benefits. To be eligible for the co-contribution, you must have received at least 10 percent of your income from what is called “eligible employment” – usually income from salary or wages or by being self employed. . Eligible employment generally means anything resulting in your being treated as an employee..
Just be aware that the employer compulsory superannuation does not count for the co-contribution. To be eligible you must make an additional contribution from after tax dollars. This is not subject to the 15% entry tax.
Noel Whittaker is a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is email@example.com