Free Money: Optimising Co-Contributions

TL;DR

This video discusses how to optimize code contributions and salary sacrifice for superannuation to maximize tax benefits.

Transcript

g'day and welcome to this week's video this week we're gonna have a look at contributions and I know what you're going to say that oh we're gonna do it again well a little bit different we're looking at optimizing code contributions along with salary sacrifice so we've spoken a lot of in the past around the lower thresholds which I'll jump straight... Read More

Key Insights

• 😘 The low income threshold for government co-contributions is $37,697, while the high income threshold is $52,697.
• 😒 Individuals in between the thresholds can use the ASIC MoneySmart website tool to determine the most tax-effective contribution strategy.
• 🤪 Making a combination of after-tax contributions and salary sacrifices can significantly increase the amount going into superannuation.

Questions & Answers

Q: What are the low and high income thresholds for receiving government co-contributions for superannuation?

The low income threshold is $37,697, and individuals below this threshold are eligible for a full co-contribution. The high income threshold is $52,697, and individuals above this threshold are not eligible for any co-contributions.

Q: How can individuals optimize their superannuation contributions for maximum tax benefits?

By using the ASIC MoneySmart website tool, individuals can determine the most tax-effective contribution strategy. This may involve making a combination of after-tax contributions and salary sacrifices, as shown in the dummy calculation.

Q: How does salary sacrifice contribute to maximizing tax benefits for superannuation?

Salary sacrifice involves contributing pre-tax money to superannuation, thereby avoiding paying the marginal tax rate (up to 34.5%, including Medicare) on that money. This significantly increases the amount going into superannuation.

Q: Where can I find the ASIC MoneySmart website tool?

The link to the calculator is provided in the video description. It is also recommended to check out the free courses available on the website, including one on understanding co-contributions.

Summary & Key Takeaways

• The video explains the low income threshold and high income threshold for receiving government co-contributions based on taxable income.

• It introduces an ASIC MoneySmart website tool that helps determine the most tax-effective way to contribute to superannuation for individuals in between the thresholds.

• A dummy calculation is shown, indicating that making an after-tax contribution of $513 and a salary sacrifice of $761 is more tax-effective than a $1,000 after-tax contribution alone.