Should I maximize concessional contributions into super? #contribution #finance

The more you earn in Australia, the more powerful concessional super contributions become.

This financial year, the concessional cap is $30,000.

Those contributions are taxed at 15% going into super if you earn under $250,000.
If you earn above that, an additional 15% tax applies to those contributions.

Now compare that to your marginal tax rate.

If you’re in the $45,000 to $135,000 income bracket, you’re paying 32.5% tax.
If you’re above that, you’re paying 37% or more.

So if you redirect some of that income into super and it’s taxed at 15% instead of 32.5%, that’s a 17.5 cent saving on every dollar.

The higher your income, the bigger the tax arbitrage.

That’s why high income earners often focus heavily on maximising concessional contributions.

General advice only.
Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).

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