Contributing to superannuation can often provide significant tax benefits and long term wealth creation benefits. Some of the contribution strategies outlined below can be combined strategically to maximise both tax and retirement planning positions.
The Government will contribute 150 per cent of an eligible taxpayer’s personal after-tax superannuation contributions during a financial year up to a scaled maximum. The Government’s calculated maximum is $1,500 less 5 per cent of any assessable income plus reportable fringe benefits that a taxpayer has above $30,342. Co-contributions reduce to $0 when income reaches $60,342. Taxpayers that receive Government cash bonuses may find themselves in a position to make an after-tax contribution and have their super fund receive an additional government payment by qualifying for the co-contribution.
A self employed person, investor or individual under 50 years of age may claim a personal deduction for superannuation contributions of up to $50,000 per annum or up to $100,000 provided the person has reached the age of 50 by 30 June in the financial year of the contribution. Individuals aged between 65 and 74 must satisfy a ‘work test’ before making a contribution. Contributors must work at least 40 hours during a consecutive 30 day period in that financial year. In addition, businesses may be able to claim a concessional superannuation contribution for a director or employee of either $50,000 or $100,000 per annum based on the relevant age of the person on 30 June 2009. Salary sacrifice Swapping some salary for increased employer super contributions remains one of the best strategies for many individuals to reduce income tax and maximising future retirement benefits. Not only will