How I got a tax refund of $ 13,878 this year (and top-up my super)

But let’s get to the grand finale – the real reason my tax refund was so important last year. And that’s because in June, I made a one-time voluntary contribution of $ 26,035 to my pension fund from my after-tax savings.

When you do that – and you hit certain limits – you can get back every tax dollar you’ve ever paid on that income, which at 39 cents on the dollar is a whopping $ 10,154 refund for me.

It’s not just pure profit, of course.

When the contribution reached my super account, my fund had to take 15 cents of every dollar and send it to the ATO.

What the tax authorities give on the one hand, it also withdraws. I paid $ 3905 in super tax on my voluntary contribution.

Yet when you deduct that from my income tax refund of $ 10,154, I still have an advance of $ 6,249. That’s a pretty big chunk of my hard-earned money that I can now keep – albeit stuck in super until I’m 60 – rather than paying taxes to the government.

Now, there are a few important things to note about this strategy.

The first, as stated earlier, is that there is a cap each year on how much you can put into the super and take advantage of the low 15 cent rate. This year, it’s $ 27,500, compared to $ 25,000 in previous years.

Importantly, this cap also includes the super contributions that your employer pays on your behalf. For me, that works out to about $ 16,000 a year, which means I only have about $ 10,000 more room to play.

So how did I manage to pocket over $ 26,000 in one go, on top of my employer’s contributions? Wouldn’t that have put me well above the $ 25,000 cap last year?

Well yes. But here’s the trick!

Until about three years ago, these annual concessional caps were a “spend or lose” deal. Second, the law was amended to allow people with a super balance of $ 500,000 or less to roll over unused cap amounts from previous years, on a rolling five-year basis.

The first year of application was 2018-19. So if you haven’t rolled out this strategy yet, chances are you have about three years of unused caps that you can still use.

To find out how much space you have, log into your MyGov account. Go to the ATO portal, click on “Super”, then “Information”, then “Carry forward of concessional contributions”.

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This is exactly what I did in June and decided to maximize all my cap amounts to turbocharge my super nest egg (having already secured a house to own and live on).

From there it was as easy as calling my super fund to get the BSB and account number needed to do a direct bank transfer.

It’s safest to do this a few weeks before June 30, to make sure the money arrives in the tax year in which you want to claim it.

Before you file your tax return, you must also complete a special form called a “Notice of Intent to Claim” and send it to your super fund. You must also wait to have confirmation from your caisse that it has received this form. They will then inform the ATO of your intention to claim your super contribution as a tax deduction and off you go.

By the way, I wasn’t quite sure what all of this would mean for my eligibility for government payments, especially the child care subsidy that I receive, given that the super voluntary contributions are included as income in the test. resources for these payments.

However, while yes, contributions are added, claiming them as a tax deduction also reduces your taxable income by the same amount. So, net-net, your income for government payments should be about the same. It was for me, although it may be worth the advice if your taxation is not as straightforward as mine.

Definitely a strategy to consider!

  • The advice given in this article is general in nature and is not intended to influence readers’ decisions regarding investments or financial products. They should always seek their own professional advice that takes their personal circumstances into account before making any financial decisions.

You can follow Jess’ other financial adventures on Instagram @moneywithjess and sign up to receive her weekly email newsletter.


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