Superannuation
Unless people work longer, or contribute more, the balance they accumulate in their superannuation account will, in many cases, be inadequate to support them in retirement, according to findings from Deloitte in its report Adequacy and the Australian Superannuation System – A Deloitte Point of View 2014 (the Deloitte report).
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. 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 ($21,908 as at 1 July 2014)
- You may not be eligible for the Age Pension.
- 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 45%.
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 |
Additional spouse contributions | If your spouse earns $10,800 or less and you add to their super you could receive a tax rebate of up to $540. You can do this every year as long as you continue to meet eligibility requirements. |
Super splitting with your spouse | 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. |
Co-contributions | If you earn less than $49,488 (2014-15) and make additional contributions to your super, the government could match 50% of your contribution (up to $500 depending on your level of income and meeting the eligibility requirement). |
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. |
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 $1.255 million limit applies to these amounts. |
Roll your super over into an allocated pension when you retire | 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 $1.355 million limit applies to the amount of eligible small business sale proceeds that can be contributed to super before additional tax applies. |
Pension payments and withdrawals over 60 | If you are 60 or over, your pension payments and lump sum withdrawals are not subject to tax (assuming you’re a member of a taxed super fund). |
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.
If you would like to know more about this product and how it can protect your business, please contact us.
Any advice or recommendation that may have been implied is General Advice only. Please be aware that we have not taken into consideration your needs, objective or financial requirements. Before deciding to purchase a financial product, you should read the Product Disclosure Statement to ensure the product is suitable for your needs.
Contact Us for Insurance Quote
What’s the next step?
Trusted by many
"Service and follow up impeccable, and their advice invaluable"
"I have had reason to claim after the recent flood
I would like to say Kellie has done a excellent job in getting my claim through. She has kept me informed all along the way and I cant speak highly enough about her.
I suggest you give her a pay rise and extra time off, ( just joking ) but seriously thanks for the great service from your company via Kellie.
"Service and follow up impeccable, and their advice invaluable"
We would definitely recommend Genesis Insurance Brokers for any business wanting top level cover at affordable prices.
"I have had reason to claim after the recent flood
I would like to say Kellie has done a excellent job in getting my claim through. She has kept me informed all along the way and I cant speak highly enough about her.
I suggest you give her a pay rise and extra time off, ( just joking ) but seriously thanks for the great service from your company via Kellie.
"Service and follow up impeccable, and their advice invaluable"
We would definitely recommend Genesis Insurance Brokers for any business wanting top level cover at affordable prices.
"I have had reason to claim after the recent flood
I would like to say Kellie has done a excellent job in getting my claim through. She has kept me informed all along the way and I cant speak highly enough about her.
I suggest you give her a pay rise and extra time off, ( just joking ) but seriously thanks for the great service from your company via Kellie.
We would definitely recommend Genesis Insurance Brokers for any business wanting top level cover at affordable prices.