Superannuation is a tax-effective way to save for your future. The earlier you start planning for your retirement, the more options you will have.
In addition to accumulating wealth that will support you throughout retirement, there are several other benefits to saving for your future. Superannuation gives you the ability to reduce your tax through deductible contributions, it acts as a means of forced savings for your future and your account is a place to house compulsory employer contributions.
If you don’t know where to start when it comes to planning and saving for your retirement, we are here to help. With our expert advice, will ensure you have the right strategies in place to secure your financial future today.
Some of the most common questions about superannuation that we are able to assist you with include:
- Is my current superannuation fund right for me?
- How do I consolidate my existing super funds?
- How do I select the right fund?
- What is my super invested in?
- Who are my beneficiaries?
- What fees am I paying?
- Can I contribute more money into my super and what are the benefits?
- Is it better to pay off my mortgage or pay additional funds into super?
A salary sacrifice to super is where you and your employer agree to pay a portion of your pre-tax salary as an additional concessional contribution to your superannuation account. This is typically a tax-effective strategy if you earn more than $37,000 a year. Depending on your income and how much you are willing to contribute to super, a mix of concessional and non-concessional may be your best option.
Essentially, salary sacrifice becomes attractive to those earning above $37,000 p.a and it’s only taxed at 15% compared with your marginal tax rates.
You also need to ensure that your salary sacrifice contributions along with your Employer SG remain below the non-concessional contribution limit of $25,000 per financial year.
From 1 July 2017, if the receiving spouse’s income is up to $37,000 p.a (phases out up to $40,000 p.a), you can make a contribution up to $3,000 p.a into the spouse’s super fund and be eligible to receive the tax rebate of 18% or $540 per year.
What you contribute will count towards your partner’s non-concessional contributions cap (the maximum amount that can be put into super after tax). The current limit is $100,000 per year.
The government co-contribution scheme rewards you for making personal non-concessional (after tax) contributions. If you earn less than $51,813 per year (before tax) and make non-concessional super contributions, you may be eligible for a matching contribution from the government, known as a government co-contribution.
If you earn less than $36,813 the maximum co-contribution is $500 based on 50c from the government for every $1 you contribute. It doesn’t matter whether you make small regular contributions or irregular lump sums, the co-contribution is based on the total amount of non-concessional contributions you make over a financial year.
The amount of co-contribution you are eligible for reduces the more you earn, however, you can earn up to $51,813 and still be eligible for something.
To receive the co-contribution, you will need to lodge a tax return for the year.
If you earn $37,000 or less you may also get a ‘low income superannuation tax offset’ from the government. The amount, up to $500 annually, will be 15% of the concessional contributions you or your employer made to your super account during the financial year.
You will get this payment whether or not you add extra money to your super. The ATO will automatically make these payments if you meet the criteria. Make sure your super fund has your tax file number so you don’t miss out.
The first home super saver (FHSS) scheme allows first home buyers to save a home deposit within their super fund. From 1 July 2017 any personal voluntary contributions you make to your super can be withdrawn to help buy or build your first home.
Under the FHSS scheme, you can withdraw up to $15,000 of eligible contributions made over a financial year or up to $30,000 in total for all years, plus an amount that represents deemed earnings.
Voluntary contributions made to defined benefit super funds are not eligible for release under the FHSS scheme.
Withdrawals can be made from 1 July 2018. To be eligible to withdraw funds under the FHSS scheme you must:
- Not have owned property in Australia before
- Be at least 18 years old
- Not have withdrawn money under the scheme in the past
Non-concessional contributions and earnings can be withdrawn tax free. Concessional contributions and earnings will be taxed at marginal tax rates with a tax offset of 30%.
You must enter into a contract to buy or build your first home within 12 months of making a withdrawal under the FHSS scheme or you will have to recontribute the amount back to super or pay additional tax on it.
We help our clients weigh up their different superannuation options to ensure they are with the right fund, help them decide whether they should make additional personal contributions or whether they should consolidate multiple funds into one. We can also help align our clients’ superannuation strategies with that of their partners to ensure they’re both on the same page and working towards the same goals.
Let’s take control of your superannuation and ensure you take every step possible to impact your retirement outcome.