Superannuation
Superannuation is one of the simplest and most cost effective means of creating and storing wealth.
Superannuation enjoys tax advantages over virtually every other form of saving. These advantages apply at every stage of the superannuation process: when money enters your superannuation fund, as earnings are created within your fund and as money leaves the fund - which it does tax free once you turn 60.
Contributions into your Superannuation Fund
There are two types of superannuation contributions:
Concessional contributions. These contributions used to be called 'deductible contributions.' Concessional contributions are contributions for which your employer (or yourself if you are self-employed) receives a tax deduction. Because this tax deduction reduces your taxable income, this means that you effectively get a tax deduction for these contributions. Concessional contributions are taxed at just 15% in the hands of your superannuation fund. The superannuation fund pays this tax out of your benefits within the fund - you do not pay it out of your own pocket. The amount of non-concessional contributions you can make each year is limited according to your age: people under 50 can contribute $50,000 and people over 50 can contribute $100,000.
Because concessional contributions entitle you to a tax deduction, you save the difference between your marginal tax rate and 15%. If you are paying tax at a rate of 30%, this means you save an extra 15% of every dollar contributed into superannuation as a concessional contribution.
Non-concessional contributions. These contributions used to be called 'undeducted contributions.' Non-concessional contributions are those for which neither your employer nor yourself claim a tax deduction. Non-concessional contributions are not taxed upon entry into your fund. Limits apply as to the amount of non-concessional contributions you can make each year. The limit is currently $150,000 per person per year.
Earnings within your Superannuation Fund
Once contributions have been made into a superannuation fund, they will be invested. These investments will create some combination of rent, interest or dividends, depending on the investments. The investments may also create capital gains within the fund.
If you are yet to retire, rent, dividends and interest received by your fund are taxed at just 15% within the fund. Capital gains are taxed at no more than 15%, but as low as 10% if the asset was held for more than twelve months.
If you have retired and are drawing a retirement pension from the superannuation fund, neither the earnings nor the capital gains are taxed at all.
Withdrawals from your Superannuation Fund
The 'tradeoff' for paying less tax on your superannuation benefits is that your money must stay within your superannuation fund until you meet a 'condition of release.' Conditions of release include: retirement, death or permanent disability and extreme financial hardship.
Of course, this 'preservation effect' is actually another main advantage of superannuation: if people don't have access to the money until they retire, then the money is more likely to still be there when they retire.
If you make a withdrawal from your superannuation fund after the age of 60, that withdrawal (either as a pension or as a lump sum) will not be taxed.
Ask us how you can make the most of Superannuation
Superannuation is a 'bread and butter' issue for us. We are keen to show all of our clients how they can make the most of their superannuation.
Please contact us to get started with this wonderful opportunity.
Superannuation is one of the simplest and most cost effective means of creating and storing wealth.
Superannuation enjoys tax advantages over virtually every other form of saving. These advantages apply at every stage of the superannuation process: when money enters your superannuation fund, as earnings are created within your fund and as money leaves the fund - which it does tax free once you turn 60.
Contributions into your Superannuation Fund
There are two types of superannuation contributions:
Concessional contributions. These contributions used to be called 'deductible contributions.' Concessional contributions are contributions for which your employer (or yourself if you are self-employed) receives a tax deduction. Because this tax deduction reduces your taxable income, this means that you effectively get a tax deduction for these contributions. Concessional contributions are taxed at just 15% in the hands of your superannuation fund. The superannuation fund pays this tax out of your benefits within the fund - you do not pay it out of your own pocket. The amount of non-concessional contributions you can make each year is limited according to your age: people under 50 can contribute $50,000 and people over 50 can contribute $100,000.
Because concessional contributions entitle you to a tax deduction, you save the difference between your marginal tax rate and 15%. If you are paying tax at a rate of 30%, this means you save an extra 15% of every dollar contributed into superannuation as a concessional contribution.
Non-concessional contributions. These contributions used to be called 'undeducted contributions.' Non-concessional contributions are those for which neither your employer nor yourself claim a tax deduction. Non-concessional contributions are not taxed upon entry into your fund. Limits apply as to the amount of non-concessional contributions you can make each year. The limit is currently $150,000 per person per year.
Earnings within your Superannuation Fund
Once contributions have been made into a superannuation fund, they will be invested. These investments will create some combination of rent, interest or dividends, depending on the investments. The investments may also create capital gains within the fund.
If you are yet to retire, rent, dividends and interest received by your fund are taxed at just 15% within the fund. Capital gains are taxed at no more than 15%, but as low as 10% if the asset was held for more than twelve months.
If you have retired and are drawing a retirement pension from the superannuation fund, neither the earnings nor the capital gains are taxed at all.
Withdrawals from your Superannuation Fund
The 'tradeoff' for paying less tax on your superannuation benefits is that your money must stay within your superannuation fund until you meet a 'condition of release.' Conditions of release include: retirement, death or permanent disability and extreme financial hardship.
Of course, this 'preservation effect' is actually another main advantage of superannuation: if people don't have access to the money until they retire, then the money is more likely to still be there when they retire.
If you make a withdrawal from your superannuation fund after the age of 60, that withdrawal (either as a pension or as a lump sum) will not be taxed.
Ask us how you can make the most of Superannuation
Superannuation is a 'bread and butter' issue for us. We are keen to show all of our clients how they can make the most of their superannuation.
Please contact us to get started with this wonderful opportunity.
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>> Contact Us >>
..............................................................
>> Home >>
..............................................................
>> About Us >>
..............................................................
>> Taxation >>
..............................................................
>> Accounting Services >>
..............................................................
>> Superannuation >>
..............................................................
>> Self Managed Superannuation >>
..............................................................
>> BAS and GST Services >>
..............................................................
>> Useful Links >>
..............................................................
>> Rates and Calculators >>
..............................................................
>> Payroll Services >>
..............................................................
>> Contact Us >>
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