Finance expert Ben Nash is urging Aussies to take urgent action on the looming deadline for a $25,000 tax deduction.
The trick involves amounts that relate to superannuation contributions and could see the taxpayer save thousands of dollars off their tax bill. Still, the deduction will vanish after June 30 2025. And in this instance, timing is everything.
Tax-Deductible Super Contributions
One can presently make tax-deductible superannuation contributions up to an annual cap. The latter has just gone up to $30,000, including employer contributions made under the super guarantee.
Hardly any worker maximises this limit. For example, someone earning $100,000 a year may get $11,500 in employer contributions, leaving them to contribute a further $18,500 to the super account in return for the same tax deduction.
And the $18,500 contribution, by anyone earning in excess of $45,000, secures a minimum tax saving of $5,920, although it is often worth much more to those on higher tax rates.
Catch-Up Super Contributions
Catch-up contributions allow the catching up of foregone super contributions of up to five years ago, provided that a person’s super balance is less than $500,000 by the previous financial year’s June 30.
Catch-up contributions would be particularly helpful for those who cannot contribute as much as possible into their super every year. However, an unused deduction from five years ago would expire permanently each July 1.
Why Act Now
Because of this deduction, one must act with speed to win. For example, an average-income Australian could have amassed about $16,000 of unused contributions from five years ago. This is not an easy exercise at the eleventh hour because gathering such money within the time element set might not be possible. Through starting now, one can spread this over a period, and therefore it would not be unachievable.
One of the practical ways is establishing a salary sacrifice arrangement. You will allow your employer to pay directly into super from your pre-tax salary, thereby shaving off from the amount required to be taken as taxable income and making it easier to reach the contribution target.
You may contribute $615 per week to super, thereby reducing your take-home pay by just approximately $418 after pre-tax deductions.
Take Action
The power of being able to avail of this facility is all active financial planning. It needs to happen early when the contributions become affordable, and even the facility of salary sacrifice makes it much easier. That’s a fantastic tax deduction but one that you got to grasp as soon as possible.
Synopsis
You must be ahead of the financial happenings, be aware of prospective tax deductions, including the super contribution facility.
Are you ready to maximise your financial opportunities and secure your future? At Advisory One, we pride ourselves on tailored financial advice to help you take full advantage of tax deductions, superannuation strategies, and much more.
Don’t hesitate to get in touch and call us at 02 6324 5888.
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