Tax Time – Super Contribution

At tax time there’s a few areas that you should consider, as there might be opportunities for you to receive a deduction. Across the next couple of days I will be sharing some areas you may not of thought about. The first one I’d like to cover is:

1.      Super contribution:

Self-employed

Great if you are self employed, or one spouse is not working.  Typically caps on tax deductible contributions for self-employed people are:

·        $30,000 for the financial year; or

·        $35,000 for the financial year if you are over 50 years of age on 30 June 2016.

Employed

The same caps apply if you are employed, but the contribution has to come from your employer, not you.  So you may be left only with salary sacrificing your last pay before 30 June 2016 to super.  Perhaps one of the other ideas would work for you.

10% rule

If some of your income is from employment and the rest is from other sources (self-employed or investment income) , then the 10% rule around super contributions will apply.  The 10% rule says that if more than 10% of your taxable income comes from employment, then you can’t make a contribution to super that is tax deductible.  If less than 10% of income comes from employment, then you are eligible for the tax deduction on all contributions up to $30,000 (or $35,000 for over 50s).

If you are not sure speak to your accountant or financial adviser.

Spouse contribution

If your spouse is not working, even if you are in an employed role, you can put up to $3,000 of your own money into your spouse’s super.  If they earned less than $10,800 in the financial year, you can claim a tax offset of $540 when you complete your tax return.  This scales down to zero for spouse’s whose income is $13,800 or above.

It doesn’t matter what super fund that contribution goes to for the tax deduction.  That is more a question around investment strategy, which is something I’ll cover another day.

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