Here are some things you might consider that can help make super one way of managing your tax.
Ways super can help you to manage your tax
You’ll generally pay just 15% on contributions made from your pre-tax salary e.g. employer super guarantee and salary sacrifice contributions.
If you’re contributing a portion of your salary into super by salary sacrifice, this can lower your taxable income which might help you to manage the amount of tax you need to pay.
Earnings you make on your money within super are taxed at a maximum of 15%, or if you’re receiving a pension through your super, tax-free – the same investment earnings outside super may be taxed at your marginal tax rate.
If you’re self-employed, you can make contributions into your super and you may be able to claim a tax deduction.
Once you turn 60, provided you’re in a taxed super fund, there’s no tax on the super benefits you withdraw or take as pension payments.
Don’t get caught above the cap
When you make contributions into your super, make sure you don’t go above the annual caps. Once you exceed these caps, the tax advantages with super fall away and your contributions will be taxed at the highest marginal tax rate plus Medicare levy plus other applicable levies. You can find out more information at the Australian Taxation Office (ATO) website.
Tax can be complex and often unique to your own situation. Make sure you talk to your accountant or financial planner about your personal situation.