The end of the financial year is approaching fast, so you need to set your mind to superannuation and ensure you’ve done what you need to do by June 30.
Many people don’t think of their super at all during the year, choosing to rest easy in the knowledge that their employer is making the contributions that will build their balances.
However, some 2.8 million Australians are being either underpaid or not paid their super contributions at all and have missed out on a massive $5.9 billion in contributions.
So, the first thing to do is make sure you have actually been receiving your payments by checking your super balance (which can be done through the MyGov website) and calling your employer if there is a problem. If you’ve been working in more that one job, especially casually, then make sure you check with them all.
Your employer pays you 9.5 per cent of your ordinary-time salary in super contributions. But the law allows you to pay in more yourself if you have the wherewithal.
Making extra payments can be particularly useful for people nearing retirement who have some extra cash and want to build their balance.
Laws introduced in 2017 allow people to contribute up to $25,000 a year in concessional contributions which are taxed at 15 per cent. That means if your marginal tax rate is above that – which for everyone paying tax it is – you will get a tax deduction for concessional contributions and pay less tax.
Murray Wilkinson, a financial planner with Future Gen Solutions, says a concessional contribution “could be useful for someone who has made a capital gain during the year and is looking for way to offset the resulting tax bill”.
If you do make a personal concessional contribution make sure you work out how much your employer is contributing so you don’t go over the $25,000 cap.
These are after-tax contributions and can be a good way of building a super balance for people who get their hands on a large amount of money. These contributions are capped at $100,000 or $300,000 every three years in one hit, and are limited to people with less than $1.6 million in their accounts.
To make any sort of contribution you need to get the appropriate form from your super fund.
Low-income super tax offset
“If you earn less than $37,697 and you make extra contribution for super of up to $1000, then the government will match you at 50 cents in the dollar up to $500,” Mr Wilkinson said.The benefit phases out gradually as your income passes $37,697 and ceases at $52,697
That can be a useful way of building a balance for low-income earners. Here again, you need to get contribution forms from your fund.
Another useful benefit people often ignore is the spousal contribution.
“If a spouse earns less than $13,800, then the other partner can put up to $3000 into their super and claim an 18 per cent tax rebate,” Mr Wilkinson said.
“That means the higher-income partner would get a tax rebate of $180 on a $1000 contribution and $540 on a $3000 contribution,” he said.
“A smart way to do this is to set up a direct transfer of say $90 a month and you can catch up with more before June 30 if you can,” Mr Wilkinson said.
First-time buyers’ super
The government allows first-home buyers to direct up to $30,000 in voluntary [above the 9.5 per cent employer payment] contributions to save up to $30,000 for a home deposit through super at the rate of $15,000 a year.
So if you are thinking of using this scheme, make sure you make a voluntary contribution to kick off the process this financial year.
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