There are many benefits to saving with your Superfund. Despite the fact that it’s still the most tax-effective option when it comes to building your life savings, many are not taking full advantage of it. In fact, Super contributions experienced a downward trend last year, falling .3%.
There could be many factors at play, but the biggest concern appears to be Australians’ lost trust in the government, after frequent law changes in relation to Superannuation. While such concern is valid, there are still many pros to maintaining your Super contributions.
Superfund Changes Aren’t All That Bad
Alarm bells ring when most people hear the dreaded phase “higher taxes.” After all, no one wants the government to take more of their hard-earned money. And that’s why some people turn a wary eye to their Super when the government changes the rules. But the recent changes really aren’t as bad as they seem.
The main difference is the change to the contribution cap, which is still higher than what most Australians contribute yearly. Also, any savings put into your Super that are above the $1.6 million mark (per person) will be taken out of the 0% area and into the 15% tax range. While zero is better, 15% is still far less than what you would pay on funds that were not kept in your Super.
Superfund Tax Benefits
While the cap for tax deductible contributions is $25,000 annually, most Australians don’t reach that maximum. But increasing your contribution as close as possible to this cap does offer some benefits, including:
Lower Tax Rates for Superfund Savings
Any income or assets you put into your Superfund will be taxed at a low rate of 15%. That number looks even better when you consider that the same assets and income could be taxed at a rate of up to 49% if you hold it personally.
Zero Taxes for Retirees
Wouldn’t it be nice to pay zero taxes? If you are a retiree over 60 years old, then this may become a reality for you. All Superfund income, capital gains, and withdrawals for most retirees is taxed at a rate of 0%.
Get the Most Tax Benefit out of Your Superfund
In order to reap the most benefits out of your Superfund, the first step to take is talking to a professional. Jonathan Grant Accountants are available to discuss your financial needs, and can advise on a plan to make your Super work for you.