The end of financial year is fast approaching, so now might be a good time to top up your super and help give your super balance a welcome boost. Here’s a guide to help you make the most out of your super before 30 June.
Super is real money and can be a tax effective way to fund your retirement. By the time you retire it will likely be one of your biggest assets, so putting some thought into making contributions today may help you achieve the lifestyle you want in retirement.
Give your balance a boost
Making additional contributions today could help boost your super balance in the future. Take Alex for example. She’s 40 years old and decides to contribute an extra $100 each month to her super, as a before-tax contribution. If she keeps it up, by the time she retires at age 67, it could mean an extra $32,276 in her super^.
And there are potential tax benefits as well:
- Reduce your taxable income– if you make before-tax contributions from your salary or claim a tax deduction in your tax return for your personal super contributions, you’ll lower your taxable income, which could mean paying less tax.
- Pay less tax on investment earnings– earnings on your super are taxed at a maximum of 15%, whereas earnings on personal investments outside of super are taxed at your personal (marginal) income tax rate. This can be as high as 45%.
Read more about the different types, limits and benefits that could apply when making a super contribution.
^ The Example is for illustrative purposes only and has not taken your individual circumstances into account. It assumes a 6.0% pa investment return in the balanced investment option in an average market until retirement at age 67. Investment return assumptions are reduced for annual investment management fee of 0.69% pa and a constant earnings tax rate of 15%.The example includes assumption of employer contribution rate of 9.5% pa (which increases over time in line with the law), a wage inflation rate of 3.5% pa and a discount for price inflation of 2.5% pa. See what you need to know section below for full assumptions and important information relating to this example.
- Before-tax contributions cap – $25,000
- After-tax contributions cap – $100,000
How you could benefit
- Tax deductions on personal after-tax contributions
- Invest in your future
- The spouse contributions tax offset
Things to consider
- Any contributions into super are generally only accessible when you reach preservation age and retire. There are exceptions, such as under the First Home Super Saver Scheme.
- If you exceed the contribution cap limits, additional tax and penalties may apply.
- Before-tax super contributions will typically be taxed at 15% upon entry to your super fund*.
- The value of your investment in super can go up and down. Before making extra contributions, make sure you understand and are comfortable with any risks tied to your investment option. Find more information about super investment options.
- There are different ways to boost to super. Find more information on the ways you can add to super
- You should consider your own circumstances and decide what’s right for you.
How can I contribute?
There are different ways to help top-up your super. Please ensure you consider your circumstances before deciding what’s right for you.
- You can generally make a personal contribution via BPAY® or cheque. Find your payment details in My AMP.
- Speak to your employer about making before-tax contributions from your salary, also known as salary sacrifice.
- You may want to consider making a spouse contribution to your partner’s super, if they are eligible to receive after-tax contributions.
Want to know more – Give us a call and arrange to drop in for a chat, or Review of your Portfolio. 08 9321 2222 – Sandra Davidson will be happy to pass on your query, or arrange a suitable time for you to come in for a chat to John or Vicki.