Despite frequent changes to its governing rules, superannuation remains, for most people, a tax-effective environment in which to save for retirement. Here’s a quick Q&A on the ‘what, why and how’ of contributing to super from this point on.
Some super contributions and the investment earnings within super funds are taxed at 15%. As this is lower than the marginal tax rate for people earning more than $18,200 per annum, less tax is paid on the money going into super than if it was paid to you as normal income. The higher your marginal tax rate, the greater the benefit.
Cap: $27,500. The unused portion can be carried forward and used in future years if your total super balance is under $500,000.
Caps: $110,000 pa, or $330,000 if a further two years of contributions are brought forward.
Note: you cannot make non-concessional contributions if your total superannuation balance exceeds the general transfer balance cap (the amount that can be transferred to pension phase), currently $1.7 million.
You can make personal contributions to super if:
You can claim a tax deduction for these contributions, but make sure you don’t exceed the $27,500 annual cap for concessional contributions from all sources; or the $110,000 cap on non-concessional contributions.
Spouse and government co-contributions can only be received up to age 70 provided you pass the work test.
You are eligible for mandated employer contributions, including Super Guarantee payments, regardless of your age.
A successful super contribution strategy can mean the difference between looking forward to retirement and dreading it. Talk to your qualified financial planner and get the right advice on the best ways to boost your super.
The information provided in this article is general in nature only and does not constitute personal financial advice.
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