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Why is super so important?

How tax-effective is super?

Clever Super strategies to consider

Why is super so important?

You might think of super as just a percentage of your salary that you can't access. But it's important to remember - it's your money, it's just being held for you until you retire.

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What tax-effective incentives is the government offering?

Salary sacrifice

If you arrange for contributions to be made to superannuation from pre-taxed earnings above the superannuation guarantee payments contributed by your employer, you will pay a maximum 15% tax on the extra contributions rather than your marginal tax rate (up to a certain limit or cap).  For more information refer to salary sacrificing - boost your retirement funds

If your spouse earns less than $10,800 and you add to their super you could receive a tax rebate of up to $540.

Additional spouse contributions

If you even out the super contributions between yourself and your spouse you may save in tax when you convert your super into a pension.

Access your super while still working

If you're over 55 and working part time you can now access your super in the form of a pre-retirement pension and still contribute to super.

Super splitting with your spouse

If you earn less than $48,516 and make additional contributions to your super, the government could match 50% of your contribution (up to $500).


Small business capital gains tax (CGT) concessions

If you own a small business, the proceeds of the sale of certain assets may be contributed to super so you can minimise CGT as well as maximise your retirement savings. A lifetime $1.315 million limit applies to these amounts.

Roll your super over into an allocated pension when you retire

If you use your super to buy an 'allocated pension' (also known as an 'account based' pension) rather than cash it in, you can save tax on the lump sum. Another benefit is that the returns on your allocated pension are not taxed.

Pension payments and withdrawals over 60

If you are 60 or over your pension payments and lump sum withdrawals are not subject to tax.
Note - There are caps on the amount of concessional (before tax) and non-concessional (after tax) contributions you can make each year.  Please contact us if you would like to know more about what the caps are and how they work.

Clever Super strategies to consider

Consolidate your super - It's much easier to keep track of your money if it's in one account and, you'll probably pay less fees.

Beef up your super savings - The before-tax contributions (also known as concessional contributions) you make, and performance returns you may earn inside super are taxed at 15%. For many people, saving through super is much more tax effective than saving the same amount outside super.

Salary Sacrificing - This simply involves agreeing with your employer for some of your pre-tax salary to be paid directly to your super fund, before income tax is deducted.  This should reduce the amount of tax you pay. For more information refer to salary sacrificing - boost your retirement funds.

Spouse contributions - In many cases one spouse accumulates the lion's share of the super. Boosting your spouse's super can reduce your family's annual tax bill.

Tax rebate for additional spouse contributions - If your spouse earns less than $10,800 pa, you can make a $3,000 after-tax contribution (also known as a non-concessional contribution) to their super account. This may qualify you for a tax rebate of $540. This strategy can be used each year.

Co-contributions - let the government top up your super. People who earn less than $33,516 a year can potentially receive a $500 helping hand from the government via a free 'co-contribution' into their super fund. If you earn $33,516 to $48,516 a year, you can still receive a super co-contribution but it will be adjusted depending on your income and how much you personally contribute.

Take a long-term view - Super is generally a long-term investment (i.e. seven years or more). And since you can't access your money until you retire, you might want to think about using a growth investment strategy.

Beware of the caps - There are caps on the amount of concessional (before tax) and non-concessional (after tax) contributions you can make each year. Please contact us for more information on concessional and non-concessional caps.

Contact us for a free initial consultation with one of our expert advisers.

The main idea behind superannuation is to help you build a nest egg which you then use to create an income in retirement (or semi retirement).

Including it as part of your financial plans can be important for a number of reasons:

  • The Age Pension may not be enough for a comfortable retirement
  • You may spend over twenty years in retirement and your money will need to last
  • Because super enjoys the benefits of compound interest and a long investment timeframe, it could be your largest asset by the time you retire
  • The government is offering attractive tax incentives.

How tax-effective is super?

For most people, saving through super can be much more tax effective than saving the same amount outside super. Firstly, any contributions your employer makes (up to a certain limit) and any returns on your super are taxed at a maximum of 15%, rather than your marginal tax rate which could be as high as 46.5%.

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