Looking for ways to save on tax? Superannuation is one of the most effective ways to do this, and there are ways you can contribute to your super, depending on your personal circumstances. Generally, you will pay 15% tax on superannuation contributions from your pre-tax salary, which includes employer Super Guarantee and salary sacrifice contributions.
The earnings you make on your money within superannuation will be taxed at a minimum of 15%, but if you’re getting pension through your super, your earnings will be tax-free. Now, here are tips to save on tax with super:
Don’t Go Above the Caps
When you make contributions into your super, don’t go above the cap. Why? When you exceed them, your tax advantages will no longer be applicable, and your super contributions could be taxed up to 94%.
Seek Professional Advice
Tax can get complicated, which means you should consider discussing your personal situation with an accountant. If you earn a higher income, it would be helpful to boost your super as this can reduce your marginal tax rate. Those who are earning a lower wage or on a break from their career would help to look into opportunities that can help you contribute to your super, and that’s something a professional can help you with.
Have Salary Sacrifice
Another way to save money on tax with the use of superannuation is to ask your employer to pay some of your salary into the super. Therefore, it’s called salary sacrifice, which is usually on top of the Superannuation Guarantee minimum percentage payments.
Before you ask your employer to do this, it’s essential to check first how the company treats salary sacrifice contributions.
Consider Government Co-Contribution
The amount you earn and contribute to your super will determine whether you’re eligible to receive a government co-contribution and for how much. If you’re eligible, the maximum co-contribution is $500 every year.
Consider Personal Super Contributions
You can boost your super by adding your own contributions. Your personal super contributions are the amounts you contribute to your super fund from your after-tax income. Keep in mind: personal contributions are non-concessional contributions that will count towards the non-concessional contributions cap unless you claim a tax deduction for them.
Use Spouse Contributions
If you’re in a relationship and have made contributions under the threshold to your spouse’s super fund, you may be eligible to get a spouse contribution tax offset if your spouse was under 70 at the time the contribution was made.
There are plenty of ways to save on taxes, and one of them is using your super. Now that you know the ways you can do this, why don’t you start saving on taxes? If this is too complex for you, it’s crucial you seek professional advice from an accountant to help you navigate your taxes. An accountant will provide you with the best solution that will help you better save on taxes.
So, your first step is to hire an accountant, and from there, you can develop ways to save on your taxes.
SMB Accounting has the best accountants on the Sunshine Coast. We can help you save more on taxes. Contact us today to get started!