The easiest way to save tax before 30 June
Before you know it, we'll be saying:
"Where did this financial year go?"
And every year around this time, I hear the same thing.
"James, is there anything I can still do before 30 June to save tax?"
The answer is usually yes.
In fact, one of the biggest tax-saving opportunities available to many Australians is sitting right under their nose.
Superannuation.
I know.
Not the most exciting topic in the world.
But if your goal is to legally pay less tax and build wealth for your future, it's hard to ignore.
Over the years, I've seen plenty of people leave it until the last minute.
Some remember in June.
Some remember on 30 June.
And some remember on 1 July... which is unfortunately one day too late.
The good news?
You're reading this now.
That means there's still time to do something about it.
There are two main ways to contribute extra into super before tax:
Salary Sacrifice
This is where you ask your employer to contribute extra money into your super from your salary before tax.
The beauty of this strategy is that it happens automatically throughout the year.
You don't see the money hit your bank account, so you're less tempted to spend it.
Personal Contributions
This is where you transfer money directly from your bank account into super.
You then complete a form called a Notice of Intent to Claim (NOITC), which tells the ATO you'd like to claim a tax deduction for that contribution.
This is a popular option for people who have built up savings throughout the year and want to reduce tax before 30 June.
One important thing to remember:the concessional contribution cap is currently $30,000 per financial year and this includes your employer's Super Guarantee contributions, salary sacrifice contributions and any personal deductible contributions. Going over the cap can result in additional tax, so it's important to know how much has already gone into your super before making extra contributions.
Let's look at a simple example.
Income: $150,000
Super Guarantee (12%): $18,000
Without making an extra super contribution:
Income tax & Medicare: $39,838
Total tax paid (including super contributions tax): $42,538
Now let's say they contribute an extra $10,000 to super and claim a tax deduction.
Super contributions tax: $1,500
Income tax & Medicare falls to: $35,938
Total tax paid: $40,138
Tax saving: approximately $2,400
That's a pretty good return for filling out a form.
But here's where most people stop thinking.
They focus on the tax saving.
I focus on what happens next.
That $8,500 left inside super after contributions tax of $1,500, doesn't just sit there.
If it grows at an average return of 10% per year:
After 10 years = approximately $22,000
After 15 years = approximately $35,500
After 20 years = approximately $57,200
Suddenly that $10,000 contribution isn't just a tax strategy.
It's an investment in your future.
One of my favourite sayings is:
"Don't just save tax. Put the tax savings to work."
That's exactly what super does.
It turns today's tax saving into tomorrow's wealth.
Think of it like planting a tree.
The best time was years ago.
The second-best time is before the financial year ends.
One important reminder:
Most of the industry super funds we use for clients have contribution cut-off dates around 15 June, not 30 June.
That's why we use our Make It Count Clock each year to track how much time remains to get contributions processed before EOFY.
The earlier you act, the less chance of missing the deadline.
If you're one of our clients we are advising or Wealth Partner clients, we have already reached out to make sure any recommended contributions are completed before the cut-off dates.
If you're not currently working with us and you're unsure whether making an additional super contribution makes sense for your situation, simply contactus or SMS 0483 937 777 with "SUPER" and we'll point you in the right direction.
A small decision today could make a very big difference to your future self.
Talk soon,
P.S. Know someone who always complains about paying too much tax? Send this blog to them. They might thank you when they keep a little more of their hard-earned money this year.
Reading is helpful. Having a plan is better.
Book your free 30-minute Discovery Session and let’s build a strategy that fits your life.
7Wealth Pty Ltd ABN 44609210246 is a Corporate Authorised Representatives and is authorised throughCobalt AdvisersPty Ltd ABN 64 628 654 099 who is an Australian Financial Services Licensee 512550. 7Wealth Pty Ltd is a Credit Representative ofAustralian Finance GroupLtd ABN 11 066 385 822 (AFG) Australian Credit Licence 389087.
This blog contains information that is general in nature. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Cobalt Advisers Pty Ltd nor their directors, employees or authorised representatives, do not give any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document.
