Superannuation is a very useful practice that prepares people for retirement, i.e. for ensuring their financial stability. The great thing is that all Australians who earn a wage or salary are required to save for their retirement. And, what’s even more convenient, you can seek professional help to provide you assistance in this process, which can sometimes seem complicated.
Syndeo Group, a company offering financial assistance in Queensland and the surrounding areas, offers a great variety of professional accounting and taxation services, one of which is superannuation consulting. So, if you have any questions, don’t hesitate even for a moment – contact Syndeo Group.
Now, let’s dig deeper and find out everything you need to know about superannuation and how to get the most out of it:
The Basics of Superannuation
First of all, you should know that your employer takes out 9.5% of your total earnings (your normal salary plus all allowances, commissions leave loading) and contributes them into your superannuation. By 2025, the minimum superannuation contribution should increase to 12% by rising of 0.5% a year.
Then, you must be under 70 years of age to have the right to superannuation contributions. Plus, your payment must be over $450 a month regardless of whether you are on a full or part-time basis. And, if you are under 18, you only have to work over 30 hours weekly to get the right to employer superannuation contributions.
Third, you need to make sure that all of your superannuation funds are in accordance with the law and all the legal standards. You can check if your superannuation contribution fund is complying very easily, by simply going to the Government’s website and finding the free register called ‘Super Fund Lookup’.
Next, in case you are self-employed, you have the right to decide whether you’d like to invest money into a fund, or not. In general, Australians are eligible to claim a deduction for their superannuation contributions until they turn 75.
Your super fund invests the money into your superannuation. And, the vast majority of super funds provide you a chance to invest your money into stocks, currency, property, etc. But, make sure you ask for a professional opinion – Syndeo Group – before choosing your preferred investment options.
Superannuation Contribution Limits
Namely, there are certain legal superannuation contribution limits you should be aware of. So, let’s have a quick look at them:
1. Before-tax Contributions
- Depending on your age, you can contribute $25,000 – $35,000, known as the concessional contributions cap, which includes your employer’s 9.5% of superannuation contribution.
- Concessional contributions and income are taxed differently. The concessional contributions are taxed at a 15% rate which is less than the income tax rate.
2. After-tax Contributions
- These are known as non-concessional contributions because you cannot get a tax deduction for them since you have paid tax on your income and then added that money to your super fund.
- The limit of the amount you put into your fund after-tax, i.e. the non-concessional contributions limit, can go up to $100,000 a year, depending on your age. And, if you go over the limit, your non-concessional contributions will be taxed at 49%.
All in all, if you want to have a comfortable retirement, you should invest in your superannuation savings!
Please note that we do not provide advice in relation to the acquisition or disposal of an interest in an SMSF (or provide any other financial service)