Superannuation has been structured to encourage saving for retirement. This has been done by being taxed differently to the way your income and investment earnings is taxed to you personally, compared to if it is part of super for investing long-term for your retirement.
If your income is less than $250,000 per annum, the maximum tax rate on super fund earnings is 15 percent, compared to a tax rate applied to earnings outside of a super fund which could be up to 45 percent. In addition there can be tax concessions on your personal income when it is added to super, which can make investment within superannuation a very attractive investment vehicle.
Everyone’s financial situation and investment requirements are different. That’s why large super funds offer you a choice on how your superannuation is invested. While retail super funds offer a range of different investments to diversify your portfolio, mainly focused just on managed funds or direct equities. However, if you want control over how you invest your retirement savings, including property and other specialised investment types, not available in retail super funds, you can elect to invest your superannuation into a self-managed super fund (SMSF). However, a SMSF requires more input from you to manage, you need to understand your responsibilities to run a SMSF, therefore a SMSF is not suitable for everyone.
Superannuation can be complex area with many rules and limits and you should seek advice about your personal financial circumstance, needs and objectives before acting.
Creating Shared Success can help you navigate superannuation and where needed refer you to a Financial Advisor who is authorised to provide Personal Financial Advice to investigate the advantages of building wealth with your super, whether a retail fund or SMSF. Here are some points you may wish to explore with your advisor.
Maximize your retirement savings
Superannuation contributions
There are two types of superannuation contributions: before-tax and after-tax and which are taxed differently.
Before-tax contributions (Concessional Contributions)
These include compulsory super contributions made by your employer and salary sacrifice contributions. Salary sacrifice contributions to your super attract 15 percent tax which is lower than the tax rate you pay on your take-home pay.
After-tax contributions (Non-Concessional Contributions)
After-tax contributions are made from your take-home pay. Therefore, if you find yourself with some spare money that you would like to add to your retirement savings, you can deposit this money into your superannuation account. Superannuation laws, may allow you to claim a tax deduction for these extra super contributions, making them before-tax contributions even if your employer is paying the Super Guarantee Contribution. However, limits apply to the amount you can claim and how you must claim the deduction to be allowed.
Additionally, if you have less than $1.9 million in your superannuation account, you may be able to make after-tax contributions of $110,000 p.a. or bring forward up to $330,00 covering up to three years of contributions to increase your retirement savings in a 15 percent tax environment. These funds can be drawn from private savings and are available tax-free when you retire.
Spouse contributions
If your spouse is taking time off work to raise children or working part time, consider boosting their super during this time so they benefit from extra contribution to their super fund and the additional earnings from interest taxed at lower rates over time.
If your spouse’s income is $37,000 or less, you can make spousal contributions up to $3,000 to their superannuation account and receive an 18 percent tax offset – a maximum of $540. The offset phases out when your spouse’s income reaches $40,000.
Find your lost superannuation
Many workers have had superannuation funds setup by their employer automatically in the past and may have lost track of these. Finding and consolidation all your superannuation into one fund can benefit your retirement savings by providing greater investment power and reduce duplication of fees.
We can help by putting you in touch with an advisor who can assist you to find lost super. It’s a very simple process and you have two options.
Option one – MyGov
MyGov is a web-based Federal Government resource that enables you to access Government services online.
To begin, visit https://login.my.gov.au/las/mygov-login and create an account. Once your account has been established, you will need to link your MyGov account to the Australian Taxation Office, input the required information and follow the prompts to find your lost super.
Option two – letter of authority
If you don’t have MyGov, our advisor can assist you to complete and lodge an ATO “Searching for lost and unclaimed super” form. The ATO will conduct a search of their records and identify any funds that have reported lost super for you.
After completing either Option 1 or Option 2, if lost super is found, your advisor will get you to sign a Letter of Authority, which the advisor sends to your super funds to access information on your behalf. Your advisor can then advise you on consolidating your superannuation, but also ensuring you do not lose any current benefits such as personal death and disability insurance cover. Your advisor will provide you with options as part of a review of your superannuation and investment strategies.
Get specific advice on a possible super fund property investment option
If a property investment sounds interesting to you as part of your retirement savings plan, it is important you consider all options and seek specific advice from a licensed Advisor.
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