Super

Money put into your superannuation fund by your employer to meet Superannuation Guarantee requirements and money put in through a salary sacrifice agreement are called concessional contributions.

Salary sacrificing means asking your employer to put some of your pre-tax earnings into your super fund. These contributions are taxed at a rate of 15% within the super fund. For most people, this tax rate is lower than their regular income tax rate.

The limit for concessional contributions is $== per year for each person. If the total of what your employer puts in, any contributions you make and the salary sacrifice contributions go over this limit, you might have to pay extra tax. However, if you have less than $== in your super fund at the end of the year before you make the contribution and you haven't used up your limit in the past, you can put in more by using the unused amounts from 2019 onwards, for up to 5 years.

Before setting up salary sacrifice into your super, it's a good idea to check your employment agreement or talk to your employer.

Once you turn 60, you won't have to pay tax on the money you get from your superannuation if it comes from a fund where taxes were already paid on the contributions made by your employer or through a salary sacrifice arrangement. Most funds are like this, so you won't be taxed on your super income once you're 60.

However, if you were in a special type of fund where taxes weren't paid on the contributions, you'll still have to pay tax on your super income, no matter how old you are.

If you're over 60 and getting super income from a taxed fund, you won't receive a PAYG income statement for it.

Now, even if your employer is putting money into your super, you can also add your own and get a tax break for it.

The money you put in and claim as a tax deduction adds up with what your employer pays and any salary sacrifice contributions you make to your super. There's a limit of $== for this total, and if you go over it, you might have to pay extra tax. But starting from 2019, if you haven't used up your limit for the year, you can save the extra amount for use in a future year, up to 5 years.

If you claim a tax deduction for a contribution you make, you won't be eligible for the super co-contribution for that amount.

You need to tell your super fund in advance that you intend to claim a tax deduction. You can use this form (https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/n71121-11-2014_js33406_w.pdf) to do that before you file your tax return or by the next June 30, whichever comes first. Your super fund must acknowledge that they've received your notice before you claim the tax deduction.

If you add money to your super without claiming a tax deduction, it's treated differently and won't be taxed in the fund. You might even be eligible for a co-contribution for those amounts you didn't claim as a tax deduction

If you don't give your superannuation fund your TFN (Tax File Number), they'll have to pay extra tax on the contributions your employer makes, including any salary sacrifice money.

Also, if your TFN isn't on record, your fund won't be able to accept any personal contributions you make, and you won't receive any government co-contributions you might be eligible for.

If you have tax questions, don't worry, we're here to help at Roger Boghani. You can find a nearby office and book an appointment online or call 0452 669 147.