Are you ready for June 30? – Part #1
Tags: Super, tax, June 30, salary sacrifice
It is June already - and therefore the countdown to the end of financial year is on.
With this in mind, it makes commercial sense for you to assess your financial position and available tax planning options prior to June 30. We thought we’d share a few tips with you over the next few weeks to help you do so.
Implementing a few simple strategies may not only save you paying unnecessary tax, it may also provide you with the opportunity to invest these savings for your future benefit.
This week, we look at how salary sacrificing into your super can not only help reduce your taxable income come June 30, but also help build wealth over the medium to long term. Next week we’ll look at the benefits of pre-paying investment loan interest, and/or paying down your mortgage.
1) Salary sacrificing additional funds into super
In the above example, salary sacrificing results in a small reduction in take home pay ($3,202), a higher super balance ($4,420 difference) and a net wealth increase ($1,218). This is due to the tax concessions of contributing additional funds into super.
While the above example may not appear compelling as a standalone example, the key is to repeat this process over a long period of time. For example:
In summary: salary sacrificing is a sound and strategic way of saving tax, accumulating wealth and building your retirement nest egg. It also has the added benefit of allowing you to accumulate more assets in a tax efficient environment that will eventually be near tax free (income and capital gains).
A potential downside is the reduction in take home pay may mean you pay down less on your home mortgage (non-tax deductible debt).
Please note - the above example is not to be considered tax advice. Rather, it is provided to stimulate your thinking in the lead up to the end of financial year and how you may better your long term financial position. Please contact us if you would like to talk to one of The Super Fund Co.’s experienced financial advisers to understand how salary sacrificing could help you.
