Q: I have a self-managed super fund (SMSF) and I also have two investment properties in my personal name. When I sell the properties, I will be required to pay capital gains tax. Can this capital gains tax be offset by a contribution to the SMSF which would be tax-deductible? Would there be a 15% contributions tax? I am 60 years of age, but not retired.
Trish’s response: Reducing the amount of income tax payable, including income tax payable on net capital gains, by making concessional (tax-deductible or salary sacrificed) super contributions remains a popular strategy.
Concessional contributions will be subject to 15 per cent tax when entering the fund. Note that the annual limit for concessional contributions is $50,000 for anyone aged 50 or over for the 2009/10 year. The contribution cap is $25,000 (for the 2009/10 year) for anyone under 50 years of age.
A self-employed or non-employed individual can only claim deductions for super contributions against assessable income, such as salary, investment income and capital gains.
Entering a salary sacrifice arrangement (making before-tax contributions to a super fund pursuant to an arrangement with an employer) is another popular strategy used to reduce an individual’s taxable income.
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