Claiming a tax deduction for concessional contributions

Discussion in 'Superannuation, SMSF & Personal Insurance' started by John Smith, 2nd Jul, 2018.

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  1. John Smith

    John Smith Well-Known Member

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    Hi All. I am wanting to clarify the tax deductibility of super contributions. Last financial year my employer and myself via salary sacrifice contributed 25k to my super account. My actual contribution was 16k. I know that my contribution is taxed at 15% but is my employer's also?
    In relation to my 16k less tax, am I able to claim a personal tax deduction against this concessional amount? Look forward to your responses. Thanks in advance. John
     
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  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Contributions are taxed going in at 15% - yours and the employers.
    You don't pay $16k less tax if you made a $16k contribution, you just earn $16k less income (if salary sacrifice) or have a $16k deduction if you make a deductible contribution
     
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  3. John Smith

    John Smith Well-Known Member

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    Thanks Terry for your reply.
    So the total going in is 21,250, which is 25k minus 15%.
    Therefore the deduction is gained by having less income remaining which is taxed at a lesser rate than what it would have been if all the money was added together and not salary sacrificed. Is this correct?
    Excuse my ignorance but this is part of my learning curve.
     
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  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Hi John, you should seek specific advice in relation to your situation, but it could be like this
    employer pays you $100,000 and you pay tax on $100,000

    or

    Employer pays you $80,000 with $20,000 paid into a superfund on your behalf
    You pay tax on $80k and the contribution to super is taxed at the 15%
     
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  5. AnthonyK

    AnthonyK Active Member

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    Hello John and All
    There is IMO a better way - using a s221D income tax variation.
    Best get this application in place at the beginning of the tax year. or before.
    It allows you to estimate your deductions for super or interest or whatever and claim them each pay period so that at the end of the tax year your tax has been reduced to the correct amount and you have the use of the rebate cash on a regular basis.
    Warning!
    Your variation must be within 10% of the correct amount or you could face a penalty!
    Regards to All
    AnthonyK
     
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  6. Rickwood

    Rickwood Member

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    The concessional contributions were by salary sacrifice. so no deductibility or 221D

    Whichever strategy you use (personal contribution and using the notice of intent, and 221 D) or salary sacrifice, you end up in the same position financially at the end as well as along the journey
     
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