Question #3: Should I pay some money into my superannuation?

Hi, my name is Tony Dimitriadis, I run an accounting & advisory firm and I specialize in helping ambitious builders and property developers build a financially rewarding tax-efficient lifestyle business.

The third most popular question I get asked up to 30 June is “Should I pay some money into my superannuation?” Well, the short answer is yes. A more detailed answer is that you can contribute money to your superannuation by either concessional contributions, which are tax deductible or non-concessional contributions which are after-tax contributions.

So concessional contributions are made from your business and are 100% tax deductible up to the contributions cap which was from the 1st of July 2017 and $25,000 so if you utilize this cap and contribute the full 25 thousand, you’ll reduce your tax based on your relevant tax rate. So in other words, if you’re a small business and you’re running your operation under a company structure, you will pay 27 and a half percent on company tax.

So therefore if you contribute the full twenty-five thousand in superannuation, you will save yourself six thousand eight hundred and seventy-five dollars in tax. Now note that 25 thousand going into your superannuation will be taxed but it’ll only be taxed at 15 percent so it’ll be taxed at three thousand seven hundred and fifty dollars. Therefore, an overall saving in a tax of three thousand one hundred and twenty-five dollars.

The added benefit here is though you will have twenty-one thousand two hundred and fifty dollars that are being invested wisely and generating more income for you being taxed at the low concessional rate. So should you put money to super? Yes absolutely should. In terms of your future earnings and future tax, it is the most concessional tax investment vehicle.

So hope you found this useful, thanks for joining me. If you have any questions, don’t hesitate to get in touch.

Tony Dimitriadis