A new government incentive could help you save more than $5000 in income tax – but it’s only on the table for the next six months.
As the coronavirus pandemic wreaks havoc on the Australian economy, the Government has scrambled to introduce measures to keep Australian households and businesses afloat.
One of those initiatives was to temporarily allow people to access $10,000 of their superannuation this financial year if needed, and another $10,000 in the next financial year.
In a piece published in The Conversation, Australian National University tax experts Robert Breunig and Tristram Sainsbury explained the new policy – covered by the Coronavirus Economic Response Package Omnibus Bill 2020 – did not include restrictions regarding how people could contribute to their super.
As a result, a “loophole” has emerged – because it is now totally legal to put money into your super, withdraw it soon after and save on tax in the process.
While the exact amount of savings will depend on your individual income tax bracket, it could represent a total saving of more than $5000 for higher income earners.
“This means that it’s possible to voluntarily contribute $10,000 of your pre-tax income into super over the next three months, and also apply to withdraw a $10,000 lump sum from super tax-free at some point before June 30,” they wrote.