Extra super contributions?

Actual first world problems.

 

My super first world problem... My new company puts my super contributions (employer and salary sacrificed amounts) into my super account on a quarterly basis. The wait is excruciating.... CBA was fortnightly (same as pay cycle).

 

Correct me if I am wrong, but my understanding is if you salary sacrifice into super, you reduce you salary, hence reducing the 9.5% guaranteed employer contributions?

 

Not unless your employer is shonky. Technically an employer can reduce the mandatory super payments but any good employer won’t.
If you have an employer who is shonky then don’t salary sacrifice, as of 1 July 2017 everyone who is allowed to contribute to super can make concessional contributions to Super to a max of $25k including the mandatory super contributions. These contributions are tax deductable.

Not advice, just my understanding.

 

MoneySmart has a very easy calculator to show how much you can put in to get to the max $25,000.
Super contributions optimiser | ASIC's MoneySmart

So say you're earning $100,000pa, and your employer puts in 9.5% = $9,500. So you can make up the difference of $15,500pa = $596/fn

 

hmm they pushing the upper limit of what they legally allowed to do
is you super taken out monthly but they paid quarterly?

 

Yep.

 

so they getting 2 months free interest of everyone money
nice organisation

 

Most companies pay quarterly as required, some awards require monthly contributions.

That is one reason why individuals lose contributions when companies go broke.

 

Has anyone tried to make one of these concessional contributions? I recently transferred $x to my Super fund. This is after tax money. Being an organised person, I sent a Notice of Intention to Claim a Tax Deduction to my super fund. Next minute they deduct 0.15x contributions tax. So I have now been taxed close to 55% on this money! Is this how its supposed to work?

I guess it will get sorted when I submit my 2018 tax return but I would rather have the money working for me now.

Lesson learned - wait until right before you submit your tax return before sending your Notice of Intention to Claim a Tax Deduction to you Super Fund.

 

That is how it is supposed to work. Super funds (in accumulation mode) have to deduct 15% from concessional contributions.
If you are desparate to get the PAYG tax back sooner then you could complete a PAYG withholding variation application, but get it in before 30 April as that is the cutoff date to adjust tax this financial year.

 

That is correct.

When you make a voluntary contribution to super, you have to state if you will be claiming a deduction so the fund knows to deduct the 15% tax.

Clearly it is better to make this payment in June rather than in July.
Marg

 

Thanks for confirming Cadbury99 and Marge. It all makes sense now with the benefit of hindsight! I'll be smarter about when I submit the form to my Super fund in future!

 

If you're contributing after tax $, you can't claim a tax deduction. The fund has followed your directions, that you hadn't been taxed on the contribution :ie came from other income account like rent) & it has been taxed.

If you have untaxed income, advise your Accountants accordingly.

Salary sacrifice, self-employed and sgc contributions get taxed going in, voluntary contributions don't as they are after tax.

 

No longer true, as of 1 Jul 2017 you no longer have to be substantively self employed to make voluntary concessional (tax deductable) contributions.

From ATO website “The most common types of concessional contributions are employer contributions, such as super guarantee and salary sacrifice contributions. Concessional contributions also include personal contributions made by the member for which the member claims an income tax deduction.”

 

And reading the tax website, these forms need to be submitted to the super fund each year? (ie the onus is on the person to advise the super fund that the contributions are from post-tax money and they will be claiming a deduction, rather than the super fund advising that $x was contributed and the accountant includes this in the tax return?

 

That's how I understand it. And this form must be submitted to your Super fund on or before whichever of the following days occurs earliest, either:
- the day you lodge your tax return for the year in which the contributions were made
- the last day of the income year after the income year in which you made the contributions

Other information says you should wait for acknowledgement before submitting your tax return. Presumably there is somewhere in the tax return to actually claim the deduction.

So my method for the future is to contribute the money to Super whenever I see fit, but DON'T submit the form until right before I am ready to file my tax return (assuming I file on time).

 

Only my thoughts which are worth something to me if no one else:

(a) check with your super fund as to any cut-off date for accepting contributions both concessional and non-deductible. Some funds may have this for end-of-year processing. So aim to get everything finalised by first week of June wouldn't be such a bad idea.

(b) bear in mind it is WHEN the contributions are received by the fund not when you send them. Example, $10k sent on 29 June but not received by the fund until after the end of financial year. Sorry peeps but it's a contribution for the following year according to my understanding - on which I am happy to be corrected.

When we were involved in making contributions to the SMSF, because we were in a good position, they were made as early as possible in the financial year. Then it was simply a matter of submitting the necessary paperwork as a more leisurely pace.

 

Not sure if I am thinking along the right direction, but given the current APRA & RC caused
credit tightening, salary sacrifice into SMSF may be worth the effort to build up equity inside SMSF
taking advantage of the tax concession.

SMSF can in turn invest with less borrowing in properties if good value opportunities arise while
credit tightening still going.

What do u guys think or not worth going down the path of SMSF borrowing at all?

Cheers,
FXD

 

Do you think property a good investment with lower leverage?