Reasons For Contributing To Super
- There are significant tax concessions on contributions for most individuals.
- Eventually, you can take it all out as a lump sum or tax-free pension.
- The income you get from a super fund is subject to just 15% tax or even 0% tax for the over 65s unless the fund earns more than $100,000 per annum.
- Employers are obliged to contribute 9.25 of salaries to super.
What happens to the money? It is usually invested in property, fixed interest securities or shares. In fact, you can decide if you want your super in growth, conservative or balanced funds, and in what proportions.
Does the government put money in? The Australian Tax Office refers to this as a co-contribution of up to $500 a year. Generally, they match it to your own contribution at the rate of 50 cents per dollar. However, this co-contribution reduces when your income is more than $33,516 and cuts out altogether if you have an income level of $48,515 per annum.
How much can an individual contribute? It is highly advised that you get expert advice first before making contributions since if you get it wrong, you can actually be hit with penalty tax at 46.5%.
Trivia Info Resource: www.otiumgroup.com.au