Superannuation, or Super, as we call it in Australia, is essentially the money put aside for your retirement. Your employer makes these contributions at a government-set rate. You can also contribute additional money to your super.
To combat Australia’s ageing population, the federal government introduced the Superannuation Guarantee (SG) scheme on 1 July 1992. This aimed to reduce the strain on government pensions. This required all employers to commit to the scheme. This scheme has been in place ever since. In 1992, the mandatory contribution rate was 3-4%, depending on the company size. This rate has steadily increased over the past 22 years. It will rise to 11.5% on 1 July 2024 and to 12% in July 2025. These increases address the rising cost of living and ensure Australians have enough money for retirement instead of relying on the government.
Did you know that you can also contribute more to your superannuation? This may also help you to reduce your own personal tax. As super contributions are taxed at a lower rate than personal income tax 15-30% vs 34.5-47%, you could contribute up to $27,500* to take advantage of these tax break benefits. Remember this needs to be done by June 30 to reap the benefits for this tax year!
If this is all new to you and you feel like you have missed out on opportunities from previous years, the government is allowing you to ‘carry-forward contributions’ from the past five years. So, what does this mean? If you didn’t utilise the full amount of your allowed contribution cap, $25,000 from 2019 to 2021, and $27,500 for 2021 and 2023, you could carry-forward the unused amount. Remember 30th June 2024 is the last chance you will have to utilise the 2019 contribution cap.
Did you know that 1 in 3 women in Australia do not have a super fund, and those that do could suffer from superannuation disparity when compared to their male counterparts? Traditionally it is women who take time out from the paid workforce to raise children then combined with the gender pay gap this can leave women on average retiring with 30% less super than men.
With this in mind, it could be beneficial to take advantage of spouse super contributions. This is when your spouse, either married or in a de facto relationship, makes contributions to your super fund on your behalf. This can also act as a tax saver – talk to us to learn more about this win-win solution for you and your family.
Perhaps you are a low-income earner, thus your superannuation is not growing at a rapid pace. You could be eligible for a government co-contribution. If you earn less than $43,445 in the financial year 2023-24 and contribute $1000 to your super (post tax), you could receive a $500 co-contribution from the government. If you earn between $43,445 and $58,445 you may be eligible for a partial co-contribution.
Check out the table below:
| If you earn: | And you contribute: | The maximum you could receive: |
|---|---|---|
| $43,445 | $1,000 | $500 |
| $46,445 | $800 | $400 |
| $49,445 | $600 | $300 |
| $52,445 | $400 | $200 |
| $55,445 | $200 | $100 |
| $58,445 (or more) | $0 | $0 |
There are many factors at play when trying to work out how much super you will need in your retirement. Do you still have a mortgage to pay? Are you paying rent? Do you have dependents? What are your lifestyle choices? Do you want to travel? There is no one size fits all when it comes to your retirement and how much you will need. The best practice is to boost your super while you can, and we can help you do this. Planning for your retirement may seem far off, but it is crucial to think about your financial future. Book a call with us today. We can ensure you receive tax benefits and boost your super accordingly.
GENERAL ADVICE WARNING
The information contained on this blog has been provided as general advice only. The contents have been prepared without taking account of your objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.
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