Skip to main content

Welcome to the Small Business Treasure Chest. I have looked inside our chest again and found some amazing jewels to share with you.

Join me over the next few weeks to view these very helpful tips that will help you reduce your Income Tax for 2020.

The third jewel I have found is all about Superannuation Contributions.

The maximum amount a person can contribute to their superfund for 2020 without being penalised, is $25 000. Superannuation contributions are taxed in a superfund at 15% which is often lower than an individuals marginal tax rate.

This includes superannuation paid as a result of a salary.

Let’s look at an example:

Harvey’s  employer contributes $ 5 400 to his super fund based on 9.5% of his salary.

He can still contribute another $19 600 to his superfund personally and claim this amount as a deduction on his personal Income tax return.

He must have a letter from the superfund confirming his intention to claim this amount as a deduction in his return. This letter is called a “Confirmation of Personal Contributions”.

If Harvey was a sole trader he would be able to contribute up to $25 000.

Here is something important for employers:

In order for employers to be able to claim super payments up until 30 June 2020 as a tax deduction, the superfunds must receive these monies by 30 June 2020.

This means that payments should be made a few days before 30 June.

Here is something important for business owners:

A company or trust business owner can pay themselves super before year end in order to reduce the business profit and therefore the business tax payable.

Something NEW:

For the 2020 tax year, there is a new ruling for deducting superannuation payments:

If at 30 June 2019 you have a total superannuation balance of less than $500 000, you can carry forward unused contributions from 2019.

So if a person only contributed $10 000 to their super in 2019, they can use the $15 000 unused amount in 2020 and so make a super contribution of $40 000 and claim this as an expense against income. This ruling continues for a period of 5 years.

You can read our first Jewel  HERE.

You can read our second Jewel HERE.

Should you wish to discuss any of the above further, please send me an email to questions@accoladeaccounting.com.au  or give me a bell on 0421 824 137.