Warning regarding the 30% contributions tax on super when exceeding $250k income - Hi folks,

I just wanted to increase awareness of this particular pitfall when selling investments during a financial year. I recently sold an investment I had held for 5 years. My salary was nothing special and my super contributions last year were less than $10,000. However because I sold an asset (which I already paid a significant chunk in CGT), my effective "income" increased over $250,000.

Now I hear you say, "cry me a river, you've done well, so cough up to the ATO". See recent news we now have a $20billion federal government surplus and tax brackets that haven't moved with inflation.

What I didn't realise is that effectively any super contributions I had paid that year is now subject to 30% tax instead of 15%. So my relatively low super contributions from my salary have now been taxed an extra \~$1500 simply because I exceeded the threshold for income that year.

Anyone selling a moderately successful investment property is going to hit that in any given financial year. Is this a completely flawed tax design that is intended to catch high earners salary sacrificing and topping up their super to reduce their income tax, but instead is catching anyone selling moderately successful investments who haven't even topped up their super in the process.

Potential strategies to consider when selling investments.

1. Don't make extra contributions into super because you may get taxed 30% anyway that year
2. Make a large contribution to super with any unused contribution caps so you reduce your income to below $250,000 that year. EDIT - I have been advised below in comments that super contributions do not reduce income for the purposes of div 293.
3. Pay 30% on your super contributions regardless of how much you contributed that year, and accept this tax was a great idea.....