Checklist: six ways to increase your super
While this option reduces your take home pay, the tax concessions and effect on your super balance could make it worthwhile.
Salary sacrifice contributions don't attract income tax and are instead taxed at 15%. Considering your marginal tax rate could be as high as 45%, depending on your income bracket1, the savings you can make by salary sacrificing - provided you stay within the contribution limits - can be significant.
Ben, 48, is starting to think more about his future and if he'll have enough money to do all the things he wants to when he eventually retires. He earns $80,000 a year and has a super balance of $100,000. He decides to sacrifice $40 a week to his super.
By the time he retires at age 67, he'll have an estimated super balance of $309,805. If Ben didn't sacrifice $40 a week, he'd end up with a super balance of $273,953.2
They could be from sources such as your take home pay, profits you receive from your business or selling an asset, contributions made by a spouse, an inheritance or the balance of a foreign super fund.
You don't need to pay additional tax when you make these types of super contributions.
All figures apply to the 2015-16 financial year.
1Does not include the Medicare Levy plus other applicable levies.
2ASIC’s MoneySmart Superannuation Calculator, moneysmart.gov.au. Calculation made on 14/09/15. Calculated assuming contribution fees of 1% and management fees of 0.50%, investment return of 5.7% and earnings tax of 7%.
Things to know before you Can:
This document contains general advice only. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial planner before making a financial decision.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.
While care has been taken in the preparation of this document, no liability is accepted by Commonwealth Financial Planning, ABN 65 003 900 169, AFSL 231139, its related entities, agents and employees for any loss arising from reliance on this document.