Maximising Concessional Contributions (Australia)

[givemesunshine]

Apologies - just realised this is on the wrong board - should be in 'Ask a Mustachian'. Sorry.

Hi all,

Question for the Aussies out there. I salary sacrifice my super and I am now in a position to maximise my concessional super contributions to the cap ($30,000 for me) as I can live with the reduction in take home and still invest outside of super.

I have done some research and know that the cap includes;

1. My employers contributions
2. My contributions (compulsory and extra)
3. Other amounts paid by your employer from your pre-tax income to your super fund, such as administration fees and insurance premiums

My questions are around the 'insurance premium' bit above. I have income protection insurance and Death & TPD insurance as part of my Super (which totalled ~$1800 last year)

Q. If I set up my super payments to be $30k/26 fortnightly payments (including Employer Contribution and Salary Sacrifice Fee) and the insurance cover payments are deducted from this I will only contribute $28,200 into my Super. Am I calculating this correctly or have I misinterpreted the ATO page? Can I contribute more than $30K but account for the 'loss' of $1800 to insurance payments?

Basically, I'd prefer to not go over the cap and have a tax debt at this point but wish to fully maximise my Super contributions (pre-tax) to the last cent.

Any help would be appreciated so I can call my fund this week and get the appropriate figure for the remaining weeks of this financial year.

Thanks.

[JRW]

Hi zinny1,

Insurance payments will not reduce your Super contributions - 30k is the limit (35k if you are over 50 years old).

It may be worth paying your income protection insurance outside of your Super fund. IP insurance is fully tax deductible. The Super fund contributions are taxed at 15%, so if your marginal rate is greater than 15%, you will be ahead.

[Luckyvik]

You are correct, The insurance premiums are part of the concessional cap BUT only if your employer pays them ie they are not deducted out of your account balance or they are but your employer is making extra contributions to cover the premiums, you can call your super fund and ask them this.

Also although insurance premiums are tax deductible outside of super inside of super you are paying them with money you only paid 15% tax on, also you might have cheaper premiums through a cheaper group insurance deal your super has and maybe your employer is paying for part/all of the premiums in which case it's free to you.

Sent from my iPhone using Tapatalk

[givemesunshine]

Thanks both for your input - much appreciated.