Query 1. If my daughter earns lower than $20,000 within the 2022-23 tax yr, and I make a non-concessional contribution to her tremendous fund, will she obtain the federal government co-contribution? Or, does she need to make the non-concessional contribution herself to qualify for the federal government co-contribution?
The federal government co-contribution is a good way to get the federal government to assist increase your retirement financial savings.
Given your daughter’s stage of earnings, if a $1000 contribution was made, she might obtain a $500 authorities co-contribution. That is a government-guaranteed 50 p.c return immediately.
After all, she wants to attend till retirement earlier than accessing the funds, although. Whenever you additionally take into account the influence compounding can have on the $1500 it’s going to develop to a really tidy sum by that point, so good on you for fascinated by it now.
One factor I’d level out for others fascinated by making this contribution for his or her kids is that there’s an eligibility rule the place you could earn not less than 10 p.c of your total earnings from employment (or self employment). So, in case your baby doesn’t work, this technique is just not relevant.
To reply your query straight, she does must make the contribution herself, subsequently you would wish to present her the funds after which she makes a non-concessional contribution to tremendous.
Query 2. I am on a full pension, nonetheless, this tax yr I’ll earn $14,000 as I work part-time. I am eligible for wage sacrificing as much as $9100. Will I incur a tax invoice?
In case you are on a full age pension, which is taxable, and earn $14,000 in wage, your whole taxable earnings could be equal to roughly $40,500.
After taking into consideration the low earnings and senior and pensioners tax offsets, your tax and Medicare legal responsibility could be about $2840.
By wage sacrificing $9100 you’ll cut back this to about $600 however need to pay contributions tax in your tremendous contributions of $1365.
Subsequently, this technique would prevent earnings tax of $2240 however the internet tax profit is $875 after permitting for the contributions tax ($2240 minus $1365).
Nonetheless very a lot a worthwhile technique.
In case you are underneath 71 on the finish of the monetary yr it is also price contemplating making an after-tax (non-concessional) contribution to tremendous of $1000 as you may additionally doubtlessly profit from the federal government co-contribution. If eligible, the federal government will contribute as much as $500 in a co-contribution.
Be aware for the aim of the above calculations I’ve assumed you might be single – nonetheless, you need to search customized tax recommendation in your precise scenario.
Query 3. I am a 75-year-old feminine pensioner and obtain a full pension. I’ve roughly $170okay in an funding. I hire my residence. I draw down $2000 per thirty days from an excellent fund. Do I must put in a tax return?
Whereas the age pension is taxable, your superannuation earnings funds ought to be tax free.
Except you have been incomes substantial taxable earnings out of your investments then the reply might be no.
For 2021-22, I assume you’re a single age pensioner, for those who had taxable earnings above $32,279 (this consists of age pension and funding earnings mixed however not superannuation drawdowns) then a tax return is required.
There could also be different causes a tax return is required and the ATO has some steering on it website.
Should you do not need to lodge a tax return however you obtain some franked dividends out of your investments, you’ll be able to apply with the ATO to acquire a refund of the franking credit with out having to submit a full tax return.
Query 4. We’re age pensioners with ‘different’ earnings and the Medicare levy. Is the Medicare levy primarily based on earnings from employment solely or any supply of earnings – pensions, shares, tremendous, investments, and many others?
The Medicare levy is predicated on your whole taxable earnings. It consists of age pension, wage and funding earnings however usually not superannuation earnings funds as these are tax-free from age 60.
For {couples} which might be over age pension age you don’t pay the Medicare levy till your taxable earnings is bigger than roughly $51,400 and the complete fee of two per cent doesn’t kick in till a mixed taxable earnings of $64,251 (for 2021-22).
Craig Sankey is a licensed monetary adviser and head of Technical Providers & Recommendation Enablement at Trade Fund Providers
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