Reduce your taxable income and save this EOFY
The end of the financial year is fast approaching. These are the best ways to reduce your income tax and access government incentives to accelerate your super savings before 30 June.
Salary sacrifice is when you make ongoing contributions from your salary to your super account. When you choose to salary sacrifice before tax you reduce your taxable income, paying only 15% tax on the amount you choose to sacrifice rather than up to 47%*, leaving you with more money to invest and grow your super. You can talk to your employer to set up salary sacrifice. There is a concessional contributions cap of $27,500 for this financial year. Salary sacrifice and employer superannuation guarantee contributions count towards the cap.
If you are not able to salary sacrifice, you may be able to make personal after-tax contributions from your savings. There is a non-concessional contributions cap of $110,000. You may be able to reduce the amount of tax you pay using this form to apply for a tax deduction on your contributions so they are treated as concessional contributions—but this means they would count towards the lower $27,500 concessional contributions cap.
If you earn up to $57,016 between 1 July 2022 and 30 June 2023 you may qualify for the government’s super co-contribution. You can make a voluntary after-tax contribution to your super before 27 June and the government will co-contribute 50c for every dollar you contribute depending on your salary, up to a maximum of $500. If you qualify, the co-contribution will automatically be paid into your super account.
For more information about rates and thresholds, visit the ATO website.
If your spouse earns a low income, you may be able to claim a tax offset of up to $540 if you contribute to their super account. For more information about the spouse tax offset visit the ATO website.
Watch your contributions grow
Use our super top up calculator to find out how your contributions can make a big difference down the track.
If you're still unsure
We are here to help. Book a chat with one of our super specialists so you can aim to make the most of EOFY 2023.
Things to consider
- Compare your super fund's tax rate of 15% against your marginal tax rate. Check the ATO's website for more information.
- Understand concessional and non-concessional caps.
- Seek financial advice if you need help deciding on the best way to contribute to your super based on your financial situation.
* The highest marginal tax rate is 45% plus 2% Medicare Levy. The marginal for taxable income less than $18,200 is Nil. Concessional contributions such as salary sacrifice are generally taxed at 15% when received by the fund, however a higher rate of tax may be payable on these contributions if your income and before-tax contributions are more than $250,000 in a financial year, or if you exceed your concessional contributions cap.
This page may include general advice but does not consider your individual objectives, financial situation, or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Prime Super is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.