Income Protection Insurance
Income protection, also known as ‘salary continuance insurance’ or ‘disability income insurance’, insures one of your most important assets, your income. It’s designed to pay you a benefit if you are unable to work for a period of time due to illness or injury.
When this insurance is purchased outside of your superannuation, the premium you pay might be tax deductible. Currently, you can insure up to 70% of your gross income. Either you want to top up your existing income protection cover or willing to apply for a new income protection policy, we encourage you to reach out to your financial adviser to discuss the options available to you.
Superannuation Contributions (Tax Concessions)
1.Claiming tax deductions for personal super contributions
Regardless of you are self-employed or an employee, you can make before tax contributions into your super fund in addition to your business or employer’s contributions for the income year in which you can claim a tax deduction. Total amount of your and your employer’s contribution for concessionally taxed amount for 2024 Financial Year must be maximum $27,500. This amount will increase to $30,000 from July 2024. Let’s say your employer has made $15,600 contribution into your superannuation as a Super Guarantee Contribution in this year. So, you are entitled to make $11,900 contributions1, and claim tax deduction when you complete your tax return, and inform your super fund of the type of contribution it was by sending them notice of intent to claim a tax deduction. Your contribution into your superannuation will then be taxed at 15% instead of your marginal tax rate which in general is much higher than 15%.
2. Suppose Contributions
Where you make a spouse contribution2 into your spouse superannuation before the end of any given financial year, you, as a contributing suppose is eligible to claim a tax offset in respect of the spouse contribution if you and your spouse meets the required conditions. By doing so, when contributing spouse reduces their tax obligations, the receiving supposes retirement savings will grow.
3. Government Co-contribution
The Government co-contribution involves the Government contributing to the super accounts of low to middle income employees and self-employed people to assist them to save for their retirement3. The contribution amount needs to be non- concessional (after tax) contribution in order to benefit from the government co- contribution.
You could receive a co-contribution into your super from the government if you:
- make a super contribution from your take-home pay
- earn a total income which is less than $58,445 per financial year (2023-2024 financial year)
- lodge a tax return for the financial year
- didn't hold a temporary visa at any time during the financial year (unless you are a New Zealand citizen or it was a prescribed visa)
- are under 71 years of age
- pass the income thresholds test (visit the ATO website for more on income thresholds)
- have a total super balance less than the transfer balance cap ($1.9 million for the 2023–24 financial year) at the end of 30 June of the previous financial year
- earn 10% or more of your income through eligible employment or carrying on a business
4. Low Income Superannuation Tax Offset
If you earn an adjusted taxable income4 up to $37,000 you may be eligible to receive a refund into your superannuation account of the tax paid on your eligible concessional superannuation contributions, up to a cap of $500.
Business Tax Incentive
Tax incentives for small businesses are meant to help them pay less in taxes, grow their business, and manage taxes more easily. Whether you qualify for these benefits depends on how your business is set up, what industry you're in, and annual turnover.
Here are the primary types of tax benefits available:
1.Small Business CGT Concessions: These are for businesses with a combined turnover of under $2 million. They offer substantial tax relief on capital gains from business assets.
2. Small Business Income Tax Offset: Aimed at businesses with a turnover of less than $5 million, this reduces the tax due on business income.
3. Small Business Restructure Roll-over: Available for businesses with a combined turnover of less than $10 million, this allows tax-neutral restructuring.
1. This is very complicated area, so we encourage you to contact for a professional advisor for guidance.
2 There are contribution eligibility requirements that must be satisfied in order to benefit from this contribution type.
3 The person may want to benefit from this need to check their eligibility for the government co-contribution, so we encourage you to reach out to a professional advisor to see if you are eligible for it or not.
4 An individual’s adjustable income might be higher than the assessable income. Prior to any action we encourage you to reach out to us to see if you are eligible for this benefit or not.
DISCLAIMERS
This document has been prepared by Navel Private Wealth, an Authorized Representative of Lifespan Financial Planning Pty Ltd ABN 23 065 921 735,AFSL No.229892 based on providing for information purpose only. Accordingly, reliance should not be placed on this material as the basis for making an investment, financial or other decision. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Navel Private Wealth, Halle Yilmaz or Lifespan Financial Planning Pty Ltd, accepts responsibility for any loss suffered by any person arising from reliance on this information. Before acting on this material, you should consider its appropriateness, having regard to your financial circumstances and needs, and whether those changes may, may not be made law, and talked to a specialist in that field.
Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management”.