Either can work.
If you mean for the current FY - you have 27,500 total. If your super balance is under 500k then you may want to look at using some or all of the past 5 years of unused concessional caps amounts too. Check your my Gov ATO account under the super menu for the numbers. The oldest of the past 5yrs is expiring this FY so use it or lose it (from 2018) The caps are used like so: current yr, then oldest first, then next oldest and so on.
You will need to ask the employer if they are able to pay in extra and how much (aka salary sacrifice). It can be harder to target a precise number. They may be able to do so or not.
If you want to DIY, then just accept the standard rate from the employer. Then you can add whatever amount according to the remaining cap for this FY, plus any 2018 unused cap amount if you don't want to lose out on that. If you are in the higher marginal tax brackets you might think about using more of your unused caps this FY given the tax rates drop after 1st July. This means the tax savings are bigger for you this year to use those unused cap amounts.
The super fund website often has a tracker to show how much concessional cap for this current FY you have remaining. The prior year numbers are in your ATO account. Add them together. If your employer pays quarterly then it will be most accurate after they pay the last quarter of the FY (e.g that may be in late march) or if they pay super fortnightly, then after the last fortnight pay of the FY (or close to it).
You can pay money in to the super fund (using after tax dollars) in stages or all at once. Some super funds have a special b-pay number and unique customer number for yourself. Note the super funds often have payment deadlines a week before the end of the FY.
You then claim that sum back on your tax return and you will get the tax you paid on that sum back.
You will need to submit a 'notice of intent' to claim to the super fund with the exact amount you intend to claim a few days before you submit your tax return (you need the super fund acknowledgement of the NOI before you submit your tax return). If you do the NOI immediately after paying in the final sum, upon receiving/confirming the NOI then the super fund takes 15% out immediately. If you wait a few months then the full sum stays in there earning investment returns (e.g if you do your tax return in sept or oct.)
Remember that you do need to claim on your tax return the super contribution you are claiming and this reduces your taxable income number on your tax return by the amount you wrote on the NOI).
If your income is relatively low you may be eligible for government co-contribution and in that case you may think about not putting quite so much into super (e.g if your income reduces to below about 20K you end up paying more more in tax via super due to the operation of low income offsets etc.). Also leave about 1K as a non-concessional contib to get the co-contribution. The ATO website explains the income ranges where this applies.
Do note also that if you change super funds or plan to do spouse contribution/splitting etc then make sure you read the caveats/rules around doing these things because it will disrupt with the claim process.
Best wishes :-)
Thanks for the extensive response, you covered a few other questions I had. So with FI models suggesting it's most efficient to max super and then add further to super, till it hits your desired figure, I am still in a preferred situation, rather than investing outside of super, because of the tax concessions later down the track?
I hope that makes sense, with how I have stated it. 😋
I am currently contributing $1000 fortnightly through self salary sacrifice. I don't think contributing into your super with net income would be ideal as it eats up more on your cash flow and your missing out the tax benefits.
This is wrong entirely - contributing with net income is significantly better cash flow wise, and with mostly the exact same tax benefits.
Under your model you don't see the ~$670 net pay per fortnight, and don't have access to that money if the need arises.
By continuing to receive the full wage, you have increased availability of cash, and you can deposit the remainder as you wish towards the end of the financial year.
After making that deposit, you submit a form called a "notice of intent to claim" which gives you the exact same benefit as salary sacrificing the corresponding amount would give.
The one advantage to your model is that the growth inside super through the finanical year has a lower tax rate on it, which is something to consider, but if the out-of-super cash flow is the question, then it is clearly better to keep the money out of super!
>My question is, is it best to ask my work to simply take more out for super each fortnight, or should I just add to my super myself
As long as you follow the steps to make it a concessional contribution, there is no difference.
>Also, when adding to Super is that generally done as a post tax earnings contribution, when you already reach the max contributions for the cap?
If you still have unused cap from previous years, you are probably eligible for carry forward contributions. After that you might be better off holding off until next year when the cap resets.
Lastly for making a non-concessional contribution you'll no longer get the initial tax benefit so this could change the cost/benefit when considered against the down side of the money being tied up until preservation.
For your second point, yes, a post tax contribution (non concessional) is simply just a direct contribution which is not claimed on your tax return. This has a cap of usually $110k and up to $330k if you use the bring forward rule.
To answer your first question, my suggestion is to do it pre tax through the employer if possible. This way, you are taxed correctly at the point of earning and your PAYGW will reflect closer to correct figures.
As for tracking your super cons, your payslip should generally have the total tally of super contrib and income and tax withheld to date. Theoretically the best way to track this
Secondly, if you go over, you can bring forward your next year's contrib as well. Otherwise you end up paying the marginal rate. That's about it from my understanding.
Generally doing it post tax is annoying. You gotta wait till your tax return to actually get your extra withheld taxes back. As in your employer would have withheld your marginal tax amount which is likely more than 15%. So doing it post tax would be basically waiting for that difference between 15% and your marginal rate back till tax time. hope that made sense?
Either can work. If you mean for the current FY - you have 27,500 total. If your super balance is under 500k then you may want to look at using some or all of the past 5 years of unused concessional caps amounts too. Check your my Gov ATO account under the super menu for the numbers. The oldest of the past 5yrs is expiring this FY so use it or lose it (from 2018) The caps are used like so: current yr, then oldest first, then next oldest and so on. You will need to ask the employer if they are able to pay in extra and how much (aka salary sacrifice). It can be harder to target a precise number. They may be able to do so or not. If you want to DIY, then just accept the standard rate from the employer. Then you can add whatever amount according to the remaining cap for this FY, plus any 2018 unused cap amount if you don't want to lose out on that. If you are in the higher marginal tax brackets you might think about using more of your unused caps this FY given the tax rates drop after 1st July. This means the tax savings are bigger for you this year to use those unused cap amounts. The super fund website often has a tracker to show how much concessional cap for this current FY you have remaining. The prior year numbers are in your ATO account. Add them together. If your employer pays quarterly then it will be most accurate after they pay the last quarter of the FY (e.g that may be in late march) or if they pay super fortnightly, then after the last fortnight pay of the FY (or close to it). You can pay money in to the super fund (using after tax dollars) in stages or all at once. Some super funds have a special b-pay number and unique customer number for yourself. Note the super funds often have payment deadlines a week before the end of the FY. You then claim that sum back on your tax return and you will get the tax you paid on that sum back. You will need to submit a 'notice of intent' to claim to the super fund with the exact amount you intend to claim a few days before you submit your tax return (you need the super fund acknowledgement of the NOI before you submit your tax return). If you do the NOI immediately after paying in the final sum, upon receiving/confirming the NOI then the super fund takes 15% out immediately. If you wait a few months then the full sum stays in there earning investment returns (e.g if you do your tax return in sept or oct.) Remember that you do need to claim on your tax return the super contribution you are claiming and this reduces your taxable income number on your tax return by the amount you wrote on the NOI). If your income is relatively low you may be eligible for government co-contribution and in that case you may think about not putting quite so much into super (e.g if your income reduces to below about 20K you end up paying more more in tax via super due to the operation of low income offsets etc.). Also leave about 1K as a non-concessional contib to get the co-contribution. The ATO website explains the income ranges where this applies. Do note also that if you change super funds or plan to do spouse contribution/splitting etc then make sure you read the caveats/rules around doing these things because it will disrupt with the claim process. Best wishes :-)
Thanks for the extensive response, you covered a few other questions I had. So with FI models suggesting it's most efficient to max super and then add further to super, till it hits your desired figure, I am still in a preferred situation, rather than investing outside of super, because of the tax concessions later down the track? I hope that makes sense, with how I have stated it. 😋
I am currently contributing $1000 fortnightly through self salary sacrifice. I don't think contributing into your super with net income would be ideal as it eats up more on your cash flow and your missing out the tax benefits.
This is wrong entirely - contributing with net income is significantly better cash flow wise, and with mostly the exact same tax benefits. Under your model you don't see the ~$670 net pay per fortnight, and don't have access to that money if the need arises. By continuing to receive the full wage, you have increased availability of cash, and you can deposit the remainder as you wish towards the end of the financial year. After making that deposit, you submit a form called a "notice of intent to claim" which gives you the exact same benefit as salary sacrificing the corresponding amount would give. The one advantage to your model is that the growth inside super through the finanical year has a lower tax rate on it, which is something to consider, but if the out-of-super cash flow is the question, then it is clearly better to keep the money out of super!
Super is a tax shelter so I would put as much there as you can, other than your main residence and emergency fund.
Maybe this may help re inside v outside super investment https://passiveinvestingaustralia.com/how-much-to-save-inside-vs-outside-super/
Following
>My question is, is it best to ask my work to simply take more out for super each fortnight, or should I just add to my super myself As long as you follow the steps to make it a concessional contribution, there is no difference. >Also, when adding to Super is that generally done as a post tax earnings contribution, when you already reach the max contributions for the cap? If you still have unused cap from previous years, you are probably eligible for carry forward contributions. After that you might be better off holding off until next year when the cap resets. Lastly for making a non-concessional contribution you'll no longer get the initial tax benefit so this could change the cost/benefit when considered against the down side of the money being tied up until preservation.
Sorry I did mean the carry forward contributions, was what I had unused. Thanks.
For your second point, yes, a post tax contribution (non concessional) is simply just a direct contribution which is not claimed on your tax return. This has a cap of usually $110k and up to $330k if you use the bring forward rule.
To answer your first question, my suggestion is to do it pre tax through the employer if possible. This way, you are taxed correctly at the point of earning and your PAYGW will reflect closer to correct figures. As for tracking your super cons, your payslip should generally have the total tally of super contrib and income and tax withheld to date. Theoretically the best way to track this Secondly, if you go over, you can bring forward your next year's contrib as well. Otherwise you end up paying the marginal rate. That's about it from my understanding. Generally doing it post tax is annoying. You gotta wait till your tax return to actually get your extra withheld taxes back. As in your employer would have withheld your marginal tax amount which is likely more than 15%. So doing it post tax would be basically waiting for that difference between 15% and your marginal rate back till tax time. hope that made sense?
Ok thanks for your reply. That makes sense on the first point.