1. Consider a one-off deposit to your super
'After-tax' contributions are those where you add money to your super account after you have already paid income tax on it, for example making a payment directly from your bank account.
It can be advantageous to invest through your super instead of outside super. Money you invest into your super from your after-tax income doesn't get taxed on the way in because you've already paid tax on this money. Instead, you pay a maximum of 15% tax on any earnings you make in your super account, rather than paying tax at your marginal tax rate as you would if it was sitting in a bank account, which could be up to 45%.
2. The low down on Government co-contributions
The Government co-contribution scheme is, an initiative formed by the Government to give you money! If you earn less than $48,516pa you may be eligible for the scheme, which could see your after-tax super contributions matched by 50% up to a maximum of $500 by the Government as an incentive for Australians to make a bigger commitment to their super savings.
How does it work?
Eligible Australians who earned less than $33,516 in the 2013/2014 financial year will receive 50 cents for every dollar (up to a maximum of $500) of after-tax money that they contribute to their super account. People who earn over that amount have their Government co-contribution reduced by around three cents for every dollar over that amount, until it reaches zero at $48,516.
3. Contributing to your spouse’s super
In a relationship there are often times when one person will be earning significantly less than the other – for example when one partner has scaled back their working hours or has taken some time off work to care for a child at home. That's why the Government introduced the spouse super contribution tax offset, allowing higher-earning taxpayers, who contribute super for their non-working or low-income earning partners to be eligible for a tax break.
4. Salary Sacrifice to top up your super
What is salary sacrificing?
A salary sacrifice arrangement is also referred to as salary packaging or total remuneration packaging. "Salary sacrifice is an arrangement where you agree to forego part of your future salary or wages in return for your employer providing benefits of a similar value". (ATO)
Salary Sacrificing Super
Salary sacrificing super contributions is an excellent way to boost your super and build a healthy long-term investment. Salary sacrifice contributions count towards your concessional contributions cap, as do any super contributions made for you by your employer. For the 2013/14 financial year the concessional contributions cap is $25,000, unless you are 60 or over when a cap of $35,000 will apply. Any contributions made above this cap will attract additional tax.
Benefits of Salary Sacrificing Super
As well as boosting your super, salary sacrificing super contributions can also provide a tax benefit.
For more information on minimising your tax and maximising your super cap for the 2013/14 year Contact Us at Southern Advisory to discuss your personal situation.