Newspaper article Coffs Coast Advocate (Coffs Harbour, Australia)

Plan for the Best

Newspaper article Coffs Coast Advocate (Coffs Harbour, Australia)

Plan for the Best

Article excerpt

SUPERANNUATION remains a highly tax-effective structure through which to hold investments. However, current contributions caps mean planning ahead over the longer term is the best way to maximise the benefits of superannuation. Contribution options that should be considered and taken advantage of include:

Salary sacrifice (employer) contributions

For individuals who have surplus income and are looking to build their capital leading up to retirement, salary sacrificing into superannuation may be an appropriate strategy. If their remuneration package includes potential discretionary bonuses, they may wish to have bonuses sacrificed into superannuation. However, the election to do this must be made before any income and/or bonus is derived in order for it to be an effective salary sacrifice arrangement. Therefore, while it may be too late for this financial year, it is never too early to start planning for next year.

Personal deductible contributions

Individuals who derive less than 10% of their income from employment may claim a tax deduction for their superannuation contributions. Personal superannuation contributions that the Australian Taxation Office allows as a tax deduction in the individualas tax return count towards their concessional contributions cap.

The amount of personal contributions that can be claimed as a tax deduction is limited to the memberas taxable income.

For the 2012/13 financial year, the concessional contributions cap is $25,000 for all individuals.

Contributions in excess of this amount cannot be claimed as a tax deduction and count towards the memberas non-concessional contributions cap.

Personal non-concessional contributions

Individuals are subject to caps on the amount of non-concessional contributions that can be made without incurring penalty tax. Non-concessional contributions within the cap are not taxed in the receiving fund. …

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