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Superannuation is the governments favoured way of saving for retirement
and because of this its designed to make investing attractive by use of
the various tax concessions. Superfunds pay a flat rate of tax of 15%.
But it is actually less than this due to: Capital gains tax discounts,
deductions and franked dividends.
The tax rates imposed on superannuation funds are:
• Contributions Tax 15%.
• Investment income 15%.
• Capital Gains are taxed at a maximum of 10%, provided the asset has
been owned by the superannuation fund for at least 12 months.
•
If you are over 60 and not “working” then
there is no limit on how much you can withdraw from super and no tax
payable on any monies withdrawn.
Contributing to Superannuation
Concessional Contributions: These Contributions are made from your
before-tax salary ie. salary sacrifice and compulsory Superannuation
Guarantee (SG) which is paid by your employer. The limit of concessional
contribution is $50,000 for people aged over 50 and $25,000 for people
under age 50.
To be eligible to make payments at age 65 to 74 years, you must be
"gainfully employed" at least on a "part-time basis" during the
financial year in which the contribution is made. Gainful employment is
where you have worked at least 40 hours in a period of not more than 30
consecutive days in the financial year in which the contributions are
made. For example, a person who has worked 40 hours in a fortnight will
be able to make superannuation contributions for the rest of the
financial year.
Non-concessional contributions are contributions made from after-tax
money. This is capped at $150,000p.a. However, people under age 65 at
any time in the financial year may effectively bring forward two years
worth of non-concessional contributions allowing them to contribute
$450,000 at any time over a three year period.
Keys Aspects to
your Superannuation
Investment Choice
Superannuation Funds offer members an investment choice. These range
from conservative options invested mainly in cash and fixed interest to
highly aggressive options invested in shares and property. The one that
suits you best will depend on your appetite for risk, time frame, goals
and your understanding of markets. Following is an example of the
different types of investor profiles:
Preservation 100% cash and fixed interest
Moderate 70% fixed Interest and 30% shares and property
Balanced 50% fixed interest 50% shares and property
Growth 30% fixed interest and 70% shares and
property
Aggressive 15% fixed interest and 85% shares and property
Very Aggressive 100% shares and property
Government Co-contribution 2010/2011 Year
If you are eligible to receive government co-contribution it’s a great
way to boost your super. If you earn less than $31,920 you will get the
maximum government contribution of $1,000 to your superfund. If you earn
more than $61,919 you will not be entitled to it. In between 31,920 and
61,919 it will be tapered depending on how much income you receive.
Consolidating Super
When you’ve
had a
few jobs you may have a few super accounts floating around the place.
It’s important to consolidate these funds and really only have one or
two. The website for lost super is
www.ato.gov.au/super.
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