If Judy did not make any contribution her taxable income (assuming no other deductions) will be $60,000, on which she will pay tax of $11,047 (plus 2% Medicare Levy).
However when she makes a $20,000 superannuation contribution her taxable income reduces by $20,000, saving her $6,500 in personal tax.
However, the super contribution will attract contributions tax of 15% in the fund, being $3,000. Therefore the overall tax saving in this scenario is $6,500 less $3,000, which is $3,500. The after tax contribution of $17,000 will form part of the taxable component of Judy’s super account and further tax could be payable when it is withdrawn (if she is under age 60 at the time or it is paid to certain dependants upon her death).
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