fbpx

Don’t forget THIS tax deduction!

Tax-Deduction-Reminder

Jeepers!

The internet can sure explode with content at certain times of the year.

Like at EOFY.

Your inbox suddenly gets inundated with articles about the 10 craziest things people claimed a tax deduction on last year.

Don’t get me wrong, useful stuff lands in your inbox, too.

But in an age where businesses are desperately competing for attention spans, it seems that valuable, practical, and actionable content can get overlooked if it doesn’t sound wild and entertaining.

And let’s be honest…the words “superannuation”, “tax” and “entertaining” are rarely seen together in the same sentence.

So, as you can guess, this post is probably not going to entertain you.

Sorry.

Buuut, if you didn’t know that you can use superannuation to reduce your tax bill – then I can at least promise this post won’t be boring for you.

Let’s dive in…

Did you leave the Tax Man a tip?

Because we’re about to launch a super fund that aims to make superannuation simple for self-employed folks, at the beginning of 2019 we ran a survey to understand our community’s current knowledge of super.

And we found out that just under 65% of people had no idea they could claim tax deductions on their super contributions. ?

Which basically means that a ton of our self-employed ‘colleagues’ have probably paid more tax than they needed to.

And leaving a tip for the Tax Man? Well, that’s hardly anyone’s preference.

Especially when you’re self-employed and every tax deduction you’re eligible for means so much to your business.

But why are more than half of us in the dark about this?

There are likely several reasons.

A big one, however, is that the system wasn’t built to help you pay attention to how superannuation works when an employer takes care of super for an employee.

So when you go out on your own, you might assume that simply putting some money in your super fund means that money automatically gets taxed at the 15% superannuation tax rate, instead of your marginal income tax rate (which, on average, is 34.5%).

However, it’s not that simple.

When you make a Personal Contribution, you then have to do some heavy lifting if you want to take advantage of that 15% tax rate.

This is because your fund can’t tell the ATO about any tax deduction claims unless you first tell the fund you want your Personal Contributions treated as a tax deduction.

And here’s how you make that tax deduction claim…

If you’ve popped some of your money into your super as a Personal Contribution and you want it treated as a tax deduction, you have to fill out something called a ‘Notice of intent to claim’ form.

For most funds, that form needs to be downloaded from the ATO or from their website. Once it’s filled out, you then need to send it back to the fund (often via snail mail…yes…snail mail ?).

The fund should then send you acknowledgement of your intention to claim the contribution as a tax deduction – confirming your money will be taxed at 15%.

Once you have that acknowledgement, you then need to give it to your accountant at tax time. Or use it yourself when you do your tax return.

That’s how you complete the whole process.

So to recap quickly…

The FULL process is this:

  1. Make a Personal Contribution to super.
  2. Find and fill out a ‘Notice of intent to claim’ form.
  3. Send it to your super fund.
  4. Receive acknowledgment from your fund, confirming your contribution will be taxed by the fund.
  5. Use the receipt when you do your tax return.

It’s not hard.

But it is unnecessarily complicated.

However, you need to know it.

Because if you simply make a Personal Contribution into your super – and you don’t claim it as a tax deduction – that money will be taxed at your marginal tax rate (on average 34.5%)…not at 15%.

So if you have made a personal contribution to super, don’t forget to consider claiming this handy tax deduction.

This post is brought to you by GigSuper

GigSuper is promoted and distributed by GigSuper Pty Ltd (ACN 620 862 053), a corporate Authorised Representative (number 1276569) of Grow Super AFSL Pty Ltd (ABN 63 135 540 135), the holder of Australian Financial Services Licence number 340958. Any financial product advice provided in this website is general in nature. Content on this website does not take into account the objectives, financial situation or needs of any person, or purport to be comprehensive or constitute investment advice and should not be relied upon as such. You should consult a professional adviser to help you form your own opinion of the information and on whether the information is suitable for your individual objectives and needs as an investor. Where necessary, you should obtain a Product Disclosure Statement relating to the product and consider it before making any decision about whether to acquire the product.

Branka Injac Misic

[email protected]

No Comments

Post a Comment

Password reset link will be sent to your email