Tax Strategy 3: Save tax by paying super before 30 June 2017

Concessional contributions are payments that are taxed in your super fund at a ‘concessional’ rate of 15%. Depending on your taxable income, your personal tax benefit could be as high as 49%. For a $30,000 contribution, the net tax saving could reach $10,200!*

The most common types of concessional contributions are employer contributions, such as 9.5% super guarantee and salary sacrifice contributions. Until 30 June 2017, if you’re self-employed (or you only receive a small proportion of your income from an employer – the 10% rule), or you’re not employed, then you can make personal contributions that you claim as a tax deduction in your individual tax return. From 1 July 2017 however, the rules will change.

General concessional contributions cap

Income year Amount of general cap
2017-18 $25,000
2016-17 $30,000
2015-16 $30,000
2014-15 $30,000
2013-14 $25,000

 

Special concessional contributions cap

Income year Aged ≥ 49 on 30.6.15 Aged ≥ 49 on 30.6.16
2017-18 $25,000 $25,000
2016-17 $35,000 $35,000
2015-16 $35,000

Superannuation contributions MUST continue to be calculated at least on a quarterly basis and paid into the fund by the 28th day after the end of the quarter.

If you miss this date for any quarter you must lodge a Superannuation Guarantee (SG) Statement and pay the SG to the ATO rather than the super fund. This amount will not be tax deductible and will include an administration fee of $20 per employee per quarter and an interest charge for late payment.

*Super is not paid on business and trust distributions and business profit dividends. If you’re a business owner and have not made any super payments for yourself in 2017, by making a $30,000 contribution you could have a net tax saving of up to $10,200 as described above.

Sasi’s Tip: Given that the super concessional contribution cap will be reduced from $30,000/$35,000 to $25,000 starting 1 July 2017, consider utilising the full $30,000/$35,000 cap available for 2017.

If you pay your employer superannuation contributions for June 2017 quarter to the superannuation fund by 30 June 2017 rather than the statutory due date of 28 July 2017, you will get a tax deduction for the contribution in 2017, instead of 2018. ‘Payment’ means the funds should have cleared your bank account by the end of business on 30 June 2017.

The information provided above is general in nature and does not constitute financial advice.

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