5 minute read
What are super contributions?
For most of us, super contributions are those compulsory amounts paid by our employer each pay cycle. We see the amounts on our pay advice summary, or on our super statement and we know those amounts are adding to our super and...well that's pretty much it, right?
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You can actually boost your super by adding your own contribution amounts in addition to what your employer pays. These amounts add up over time and benefit from investment earnings that compound over time (that is earning money on the money you have earned on your contributions).
Sounds great, how do I start?
Salary sacrifice contributions are a great way to boost your super and save in tax. Your employer deducts an amount that you nominate from your salary before you pay tax and pays it to your super fund. These are known as concessional contributions and are taxed at 15% in your super fund as opposed to your marginal tax rate which is generally higher. You can currently make up to $25,000 of concessional contributions per year into your super which includes your employer contributions and any salary sacrifice amounts. Use our Salary sacrifice calculator to do the sums and work out how much you can save on tax and boost your super at the same time.
You can also make contributions from your take home pay – i.e. after you have already paid tax. These are called non-concessional contributions and don’t attract a tax when paid into your super fund since you have already paid income tax. Earnings on these contributions however will still attract a 15% tax which is paid within your super fund. There is a current contribution limit of $100,000 per annum, called the ‘non-concessional contributions cap’.
If you make non-concessional contributions into your super account, you may be eligible for a Government co-contribution. The Government can make super co-contributions up to $500 if your total income is less than $54,837 for the 2020-21 financial year.
You can also contribute to your spouse’s super. If your spouse is earning a low income or not working, you may be able to claim a tax offset. For more information on spouse contributions and Government co-contributions, please refer to the ATO website.
If you are self-employed, you can still contribute to your super and benefit from a tax deduction. Visit the ATO website for more information or speak to our wealth specialist team about obtaining advice.
If you are a Bendigo Smart Start Super member, you can find all your personal details online via our secure member portal needed to boost your savings today.
Still not sure and you are after some general advice? We have a team of wealth specialists available to call you. They can refer you to a financial planner if you need personal advice.
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