The best strategy is to reduce your taxable income below $250,000 by claiming allowable deductions such as donations to charity.
, an extra 15 per cent that anyone on income above $250,000 must pay on tax concessional contributions to super. I’m nearing retirement and thinking about selling shares to boost my super savings with after-tax contributions. My salary is $200,000 plus super, but I expect the share sale will increase my taxable income above $300,000. How will Division 293 affect me? I have also heard it is possible to use tax deductions to charities to help offset this? Frank.
For anyone on a salary of $200,000 plus super, it’s easy to come up against Division 293 tax when you have a significant one-off liquidity event like the sale of shares you mention. Bonuses, capital gains, and even redundancy payments can also count towards your adjusted taxable income, potentially triggering a higher personal income tax bill.
The best strategy is to reduce your taxable income by claiming allowable deductions so it is less than $250,000. Ancillary funds are set up to provide money, property or benefits to organisations endorsed as a DGR. For anyone still in the workforce, says Cuffe, this donation strategy can offer a substantial tax deduction now, when your marginal tax rate is higher, and help reduce adjusted taxable income for personal tax and Division 293 purposes.
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