Noob Tax Question

Discussion in 'Accounting & Tax' started by Bean27, 1st Nov, 2019.

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  1. Bean27

    Bean27 Well-Known Member

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    Hi all

    Currently working 2 jobs and by current calculations I wont pay enough tax this year and end up with a tax bill. Ive been researching but am finding myself confused. If I make a personal after tax super contribution is that tax deductible? Ideally in the future I have an investment property to reduce my taxable income that way but I am not in a position to have one yet.

    Cheers
     
  2. Trainee

    Trainee Well-Known Member

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    If your employer was deducting more tax out of your paypacket, so that you ‘paid no tax’ when you lodge your tax return, would you still be thinking about making a super contribution?

    why not just tell your employer to deduct 47% from your pay? Youll get a refund then.
     
  3. Bean27

    Bean27 Well-Known Member

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    Because we are doing renovations so Cash flow is important. I would also like more money to stay in my offset account. I just thought if I could make a lump sum contribution and reduce or eliminate my tax bill then its a win win. But if that is not an option then yes ill have to pay more tax
     
  4. Trainee

    Trainee Well-Known Member

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    If you make a contribution that money will be locked away until 65.

    if the objective is to maximise cash in the offset, whats the benefit of locking away $100 in super to reduce your tax bill by $15?
     
  5. Bean27

    Bean27 Well-Known Member

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    I see your point but its not $15, the tax estimated tools have predicted $1500. The problem is I salary sacrifice on both jobs which reduces my taxable income but also tax paid. Great for cash flow but has created this problem
     
  6. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A tax deductible super contribution will strip cash from your account and leave you unable to access those funds as they are preserved. Yes it may permit a deduction at your marginal tax rate but it is also taxed into the fund at 15%. The rate difference may be a benefit but the preservation issue may make super less atractive depending on your age

    A better alternative is to calculate the expected shortfall and set this aside so you can pay the tax when it becomes due. You could also ask the employer to withhold extra tax.
     
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  7. Bean27

    Bean27 Well-Known Member

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    Yeah ok, I am only 29 so not close to retirement at all. I guess paying 1500 into my super is not going to reduce my tax bill by 1500? Cheers for the advice
     
  8. Trainee

    Trainee Well-Known Member

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    Think in percentages, not dollars.
     
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    You should be paying tax at the rate applicable to the sum of the income of both jobs and only claiming the tax threshold on one job. If you don't want a tax debt, then get the threshold on the lower paid job and get extra tax taken out (if need be), if you want to maximise cashflow, keep the threshold in the job paying the most.

    The reason that you end up with a shortfall is that both jobs calculate the tax on what you are earning in that job, not as a combined income which may be in a higher tax bracket for part of that income.

    Super is accessible at 60, it is the pension which you don't qualify for until 67. An after tax contribution may or may not be preserved.
     
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  10. Bean27

    Bean27 Well-Known Member

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  11. Trainee

    Trainee Well-Known Member

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    Did you claim the threshold on both jobs?
     
  12. Bean27

    Bean27 Well-Known Member

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    No I didn't just the highest paying. But I salary Sacrifice on both which is part of the reason I am paying bugger all tax. First $991 from the 2nd job is always tax free so I rarely pay much tax at all on that
     
  13. Scott No Mates

    Scott No Mates Well-Known Member

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    If you are only getting the threshold on the higher paying job, then you would be paying tax on every dollar that you earn on the second job. Something's not right.
     
  14. Bean27

    Bean27 Well-Known Member

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    Salary Sacrifice is effectively "tax free money" under the fringe benefits thingy for government or non for profit organisations. I get around 16 k tax free from both jobs which does not come under my taxable income. My second job I only earn on average $1400 gross per fortnight and the first $991 is tax free because of salary sacrifice, as a result I pay much less tax then I should. Some pays I pay $0 tax on the second job
     
  15. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes double dipping the FBT can also throw a spanner is normal withholding meaning the tax scales for the second job are quite low. I generally suggest taxpayers with split jobs consider estimate of full year tax based on payslips early in the year and consider what the shortfall can be so they know and set it aside or have more tax withheld.
     
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  16. Bean27

    Bean27 Well-Known Member

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    That is the plan, that is why I love having an offset accounts, big buffers
     
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