Concessional Contributions: Utilise super to reduce tax | Summary and Q&A

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June 12, 2020
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Investor Motivation
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Concessional Contributions: Utilise super to reduce tax

TL;DR

Learn about maximizing your superannuation contributions to reduce taxes and increase savings.

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Questions & Answers

Q: What are concessional contributions and how can they help reduce taxes?

Concessional contributions are contributions made into superannuation, taxed at a maximum rate of 15%. They include employer contributions and salary sacrifices, helping individuals reduce their taxable income and save on taxes.

Q: Can self-employed individuals make lump-sum tax-deductible contributions?

Yes, self-employed individuals can make lump-sum tax-deductible contributions to superannuation. They can contribute cash up to the annual limit of $25,000 and claim it as a tax deduction, reducing their overall tax liability.

Q: Is it too late to start a salary sacrifice arrangement towards the end of the financial year?

Starting a salary sacrifice arrangement right before the end of the financial year may not yield significant results in reducing taxable income. It is recommended to implement these strategies well in advance to ensure the money is in the superannuation fund by June 30th.

Q: Are there any limits on the amount of cash that can be contributed as a personal lump sum?

Individuals can contribute up to $25,000 as a personal lump sum towards superannuation. This can be cash that is not necessarily income earned, and it can be claimed as a tax deduction by submitting an intent to claim form to the superannuation fund.

Summary & Key Takeaways

  • Individuals can make concessional contributions of up to $25,000 per year into superannuation, taxed at a maximum rate of 15%.

  • Concessional contributions include employer contributions and salary sacrifice amounts.

  • In addition to regular contributions, individuals can make lump-sum tax-deductible contributions towards the end of the financial year.

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