Thank you for the link, looks like I am bang on accurate apart from forgetting to calculate the LITO.
Wish I knew about this calculator sooner but now I understand how tax is calculated so that's fine as well.
If the 20k includes the SG payment made by your employer then you're not tax deducting that. You make a deduction for payments made from your after tax pay, by first filling out a notice of intent to claim with your super fund, where-upon the fund will remove 15% tax.
Or am I reading your intent incorrectly?
Sorry, I will change that. The 20k is NOT from employer and is a voluntary concessional contribution. 20k is EXCLUDING SG/employer contributions.
Does anything else look incorrect to you?
Just watch you don't go over the concessional limit, as on that income you'll be close.....unless you have some carry forward from prior years you can use
Looks like you'll get a partial LITO also: that will explain a minor difference when you hit the forecast button in mytax (sorry, I'm already in bed on the tablet and my spreadsheet is on the laptop so can't say how much).
Good point. LITO reduces tax payable by $700 if taxable income is $37.5k or lower; it reduces by 5c for each $1 above this. If taxable income is $50k, LITO would be $75.
LMITO reduces tax payable by $1500 if taxable income is $37k or lower; it reduces by 7.5c for each $1 above this. If taxable income is $50k, LMITO would be $525.
OP, these are offsets - they don’t reduce your taxable income (like deductions do), so medicare levy is still calculated on the $50k. Offsets do reduce the tax payable though, which would likely lead to a higher tax refund in your example.
There are two separate offsets. There’s the Low income tax offset, and then there’s the low and middle income tax offset. Only the latter has been removed.
Sorry could you please elaborate further, is this not what I am doing above?
I have calculated exactly how much tax I should be paying + medicare levy, and using that to minus the tax withheld to calculate my tax return.
Or am I misunderstanding?
Adding onto OP above: with the drop in taxable income (because of a concessional super contribution) does the calculated medicare levy and HECS tax also drop as well? Or is it taxed at the original income tax level (ignoring the tax deduction)?
If I'm understanding you correctly, are you asking if my medicare levy will be 2% of 50k or 2% of 70k?
Honestly I'm not 100% sure so hopefully someone can confirm this, but on the ATO website, it says *"The Medicare levy is 2% of your* ***taxable income.****"*
So because my "new" taxable income is 50k since I made a 20k contribution, I'm assuming it will only be 2% of 50k and not 70k.
Someone please tell if I am incorrect!
Yep thats exactly what im asking. Hoping someone can confirm on the Medicare Levy.
Looks like HECS (which of course is not relevant to your situation) is more complicated as its not just calculated on taxable income, but any super contributions as well. So id say that one doesnt lower at all.
If you earn $70k and are maximising your concessional, then hats off to you.
Thank you, it is my first time doing so. Hope I can do so in the next years.
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Thank you for the link, looks like I am bang on accurate apart from forgetting to calculate the LITO. Wish I knew about this calculator sooner but now I understand how tax is calculated so that's fine as well.
Great tool. Thank you
If the 20k includes the SG payment made by your employer then you're not tax deducting that. You make a deduction for payments made from your after tax pay, by first filling out a notice of intent to claim with your super fund, where-upon the fund will remove 15% tax. Or am I reading your intent incorrectly?
Sorry, I will change that. The 20k is NOT from employer and is a voluntary concessional contribution. 20k is EXCLUDING SG/employer contributions. Does anything else look incorrect to you?
Looks correct to me, though I believe you'd also be able to get a part of the low income tax offset as well
Yes, your calculations look spot on. I initially misread your post my apologies
No problem at all, thanks very much for your reply. Hopefully this will give me ballpark of what to expect in my tax return!
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I do not, I paid it off in the previous financial year.
Then congratulations:)
Thank you my friend
Just watch you don't go over the concessional limit, as on that income you'll be close.....unless you have some carry forward from prior years you can use
Thanks for the reminder, but yes I have a large carry forward amount. This is the first time I will be making a voluntary concessional contribution.
Looks like you'll get a partial LITO also: that will explain a minor difference when you hit the forecast button in mytax (sorry, I'm already in bed on the tablet and my spreadsheet is on the laptop so can't say how much).
Good point. LITO reduces tax payable by $700 if taxable income is $37.5k or lower; it reduces by 5c for each $1 above this. If taxable income is $50k, LITO would be $75. LMITO reduces tax payable by $1500 if taxable income is $37k or lower; it reduces by 7.5c for each $1 above this. If taxable income is $50k, LMITO would be $525. OP, these are offsets - they don’t reduce your taxable income (like deductions do), so medicare levy is still calculated on the $50k. Offsets do reduce the tax payable though, which would likely lead to a higher tax refund in your example.
I thought they abolished LMITO from 2022-23 fy?
That's what I was thinking as well... Might have to look into it
There are two separate offsets. There’s the Low income tax offset, and then there’s the low and middle income tax offset. Only the latter has been removed.
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Sorry could you please elaborate further, is this not what I am doing above? I have calculated exactly how much tax I should be paying + medicare levy, and using that to minus the tax withheld to calculate my tax return. Or am I misunderstanding?
Adding onto OP above: with the drop in taxable income (because of a concessional super contribution) does the calculated medicare levy and HECS tax also drop as well? Or is it taxed at the original income tax level (ignoring the tax deduction)?
If I'm understanding you correctly, are you asking if my medicare levy will be 2% of 50k or 2% of 70k? Honestly I'm not 100% sure so hopefully someone can confirm this, but on the ATO website, it says *"The Medicare levy is 2% of your* ***taxable income.****"* So because my "new" taxable income is 50k since I made a 20k contribution, I'm assuming it will only be 2% of 50k and not 70k. Someone please tell if I am incorrect!
In your example, your taxable income is $50k, so the medicare levy is calculated on this.
Yep thats exactly what im asking. Hoping someone can confirm on the Medicare Levy. Looks like HECS (which of course is not relevant to your situation) is more complicated as its not just calculated on taxable income, but any super contributions as well. So id say that one doesnt lower at all.