TAX TIP

Check pre-tax su­per amount

Money Magazine Australia - - THIS MONTH - MARK CHAP­MAN, DI­REC­TOR OF TAX COM­MU­NI­CA­TIONS AT H&R BLOCK. MCHAPMAN@HRBLOCK.COM.AU

For many peo­ple sav­ing for re­tire­ment, pos­si­bly the most sig­nif­i­cant change in su­per­an­nu­a­tion rules is a cut in the amount that can be con­trib­uted from pre-tax in­come. These are called con­ces­sional con­tri­bu­tions.

From July 1, you can con­ces­sion­ally con­trib­ute up to $25,000 into your su­per fund each fi­nan­cial year. This in­cludes your em­ployer’s 9.5% SG con­tri­bu­tion, any salary sac­ri­ficed amounts and tax-de­ductible per­sonal con­tri­bu­tions (typ­i­cally paid by the self-em­ployed).

Un­til June 30, the con­ces­sional cap is sub­stan­tially higher at $30,000 (un­der 49) or $35,000 (49 or over). If you can make ad­di­tional con­ces­sional con­tri­bu­tions, it’s a good idea to get the ball rolling as soon as pos­si­ble to take ad­van­tage of the cur­rent higher cap.

For many peo­ple who al­ready salary sac­ri­fice the max­i­mum amount, now is very much the time to take some ac­tion to pre­vent prob­lems aris­ing af­ter July

1. If your ar­range­ment is set up to take ad­van­tage of the cur­rent caps, you risk mak­ing ex­cess con­tri­bu­tions if you don’t ad­just your deal with your em­ployer. This can lead to ad­di­tional tax charges.

If you’re af­fected, you need to ur­gently ad­just the amount you salary sac­ri­fice so that your over­all con­ces­sional con­tri­bu­tions are re­duced to $25,000.

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