If you have surplus cashflow or savings, you may want to make an after-tax super contribution and claim a tax deduction to reduce your taxable income.
You’re employed, self-employed or earn taxable income from other sources (such as investments).
Bob is 55 years of age and earns $80,000 p.a., so his marginal tax rate is 34.5%2. He’s paid off his mortgage and plans to retire in 10 years – so he wants to contribute more to his super.
He makes a personal super contribution of $10,000 and claims the amount as a tax deduction – reducing his taxable income. This means he pays $3,450 less tax in his tax return. Meanwhile, tax of 15% ($1,500) is deducted from the contribution in the fund.
By using this strategy, Bob increases his super balance and makes a net tax saving of $1,950 (that is, $3,450 less the $1,500 tax he paid within his super fund).
1. Individuals with income from certain sources above $250,000 in 2020/21 will pay an additional 15% tax on personal deductible and other concessional super contributions within the cap.
2. Includes Medicare levy.
Any advice and information on this website is general only, and has been prepared without taking into account your particular circumstances and needs. Before acting on any advice on this website you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives.
Any general tax information on this website is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.
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