8. Super Tax Savings for Small Business Owners
| Clients |
Peter and Fiona, Self-Employed Business Owners |
| Income |
Highest marginal tax bracket – 46.5%/td>
|
| Needs |
1. Build additional investments outside of their business
2. Solve tax issue after they recently sold an investment unit on the Sunshine Coast that they had owned for a number of years. The capital gain of $80,000 will trigger a capital gains tax (CGT) liability.
|
| Solution |
Peter and Fiona were advised to invest some of the proceeds from the sale of their investment property into super (in the same year the capital gain was triggered) and claim a tax deduction for these contributions. They are eligible to claim a tax deduction for their contributions as they are self-employed (earning less than 10% of their assessable income from eligible employment). |
|
Income
|
No Super Contribution
|
With Super Contribution
|
|
Net capital gain1
|
$40,000
|
$40,000
|
|
Super contribution (deduction)1
|
(N/A)
|
($40,000)
|
|
Taxable income
|
$40,000
|
Nil
|
|
Tax
|
|
|
|
Income Tax (46.5%)
|
($18,600)
|
Nil
|
| Contributions Tax (15%) |
(N/A)
|
($6,000)
|
| Total Tax |
($18,600)
|
($6,000)
|
| Net saving (combined) |
|
$12,600
|
1 Peter and Fiona are eligible for the 50% CGT discount and have no other capital losses. The total gain of $80,000 was discounted by 50% to $40,000.
2 The personal contribution and tax deduction for Peter and Fiona is $20,000 each. They each have a concessional contribution cap of $50,000 per annum.
Peter and Fiona are considering making further contributions to super (up to $30,000 each) to claim an additional tax deduction and overall benefit.
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