Taxation of individuals, superannuation and retirement
This domain tests personal marginal rate calculations, deduction entitlement, and the superannuation caps and taxes that apply from accumulation through to retirement phase.
Rates and offsets
- 2024-25 resident rates: nil to $18,200; 16% to $45,000; 30% to $135,000; 37% to $190,000; 45% above. Medicare levy is 2%, with the Medicare levy surcharge of 1–1.5% above income thresholds.
- The low income tax offset is up to $700 and phases out; SAPTO applies to eligible seniors.
Deductions for individuals
- Section 8-1 requires a nexus with assessable income; self-education is deductible only if it relates to current income.
- Home office claims use the 67 cents per hour fixed rate or actual costs, with records.
- Private and domestic outgoings are not deductible; substantiation rules apply to work-related claims.
Superannuation contributions
- Concessional cap $30,000 for 2024-25; unused amounts carry forward for five years where total superannuation balance is under $500,000.
- Non-concessional cap $120,000; the three-year bring-forward allows up to $360,000 subject to total superannuation balance thresholds.
- Division 293 imposes an extra 15% on concessional contributions where income plus contributions exceeds $250,000.
- Superannuation guarantee is 11.5% for 2024-25, rising to 12% from 1 July 2025.
Retirement phase
- Transfer balance cap is $1.9 million from 1 July 2023; earnings on balances above $3 million are taxed at 15% under Division 296.
- Earnings supporting retirement phase income streams are exempt; minimum pension standards apply and preservation age is 60.
Worked example
Salary $230,000 plus $30,000 concessional contributions gives Division 293 income of $260,000. The excess over $250,000 is $10,000, so the extra tax is 15% × $10,000 = $1,500, generally payable from the fund.
Traps
- Claiming a personal super contribution deduction without a valid notice of intent.
- Applying the bring-forward without testing total superannuation balance.
- Assuming the transfer balance cap is the same for everyone rather than personally indexed.
- Treating all fund earnings as exempt after 60.