Turn your spare cash into a tax-effective savings plan for retirement.
How does it work?
Putting some of your take-home pay into your super (ie making ‘undeducted contributions’) can be a tax-efficient way to save – as long as you’re prepared to put it away until retirement.
Because you have already paid income tax on this money, the ATO does not tax you twice.
So unlike normal super contributions, which are taxed at 15% by the super fund, undeducted contributions are received in full into the super environment.
You also pay only 15% tax on earnings on these funds, as opposed to paying your marginal tax rate on the earnings outside super.
If you’re self-employed, you can generally claim your super contributions as a tax deduction.
If you earn under $60,342 and use this strategy, you may also be eligible for the Government Co-contribution.
