Did you know you can boost your super fund and save more on tax? Here’s how you can do it.
This article is published by Modoras Accounting (QLD) Pty Ltd V11022019
Boost Your Super For The Lifestyle You’ve Always Wanted
Making smart choices when it comes to one’s super may create a healthy nest egg that can help individuals live the best life long after they’ve stopped working.
Even the slightest change in one’s money habits can go a long way in boosting super, subsequently creating more opportunities to increase tax savings which could then be helpful in further growing your retirement savings. This could mean the difference between living the lifestyle you’ve always wanted and struggling to make ends meet even during your older years.
Ways to boost super
For working individuals, contributions are assured under the Super Guarantee (SG). Employers are mandated by law to make quarterly contributions (9.5% of the employee’s salary) to a super fund chosen by the employee.
There are other options available to help augment an individual’s super:
Under an agreement with the employer, individuals allocate a portion of their pre-tax salary to be put into their super fund—on top of the 9.5% guaranteed employer contribution. This will reduce one’s take-home pay but potentially reduce taxable income and increase retirement savings.
Personal contributions can supplement your (or a spouse’s) retirement savings. Considered non-concessional, personal contributions may be taken out of an individual’s after-tax salary, an inheritance, a pay rise or extra income and cannot go above the cap, which is $100,000 per year for those aged under 65.
The government can also provide assistance to low or middle-income earners making personal super contributions so long as they meet the eligibility requirements. This top up can amount to $500 and is tax-free.
Those with multiple super accounts will need to nominate the preferred fund while those who are already retired and no longer have an eligible super account may request a direct payment from the ATO.
Super contributions are going to be vital in helping you afford a comfortable standard of living in retirement. This is one very good reason for you to contribute more to your super.
Claim tax deductions before EOFY
The end of financial year can provide numerous opportunities for both businesses and individuals to get more out of their finances though increased tax savings. This is also a good time to boost retirement savings by making after-tax contributions to your super.
Individuals must be below 65 or 65 to 74 and have worked at least 40 hours for more than 30 consecutive days in the financial year to be able to make a personal deductible contribution.
Reduce income tax
Super contributions from post-tax wages or savings are tax deductible and will reduce taxable income. Instead of paying the marginal tax rate, which can be as much as 47%, super contributions are only taxed at 15%.
Claiming the tax deductible
To claim the super as a deductible, submit a valid ‘Notice of Intent’ form along with your super fund. An acknowledgment form will be supplied. It’s important to start a pension or withdraw or rollover the money before completing the tax return.
Remember your contribution cap
Super contributions that are claimed as tax deductions will count towards your concessional cap, which is $25,000 for the 2018/19 financial year. These are in addition to employer contributions–salary sacrifice and superannuation guarantee–that are counted towards the cap.
Taking the steps towards a healthy retirement fund will require taking advantage of all available options so you can live your best life. For more resources please go to the following:
Don’t leave your retirement to chance. We can help you take the steps towards your lifestyle potential. Talk to our professional advisers and schedule a consult by clicking here.
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