Maximise the benefits of Your Superannuation

In the previous blog, we explained the differences between a Concessional Contribution and a Non-concessional contribution, and the potential benefits of making these contributions will be explained in today’s blog.

1. Tax Benefits

Firstly, the generous tax saving under superannuation is a key consideration for people seeking to allocate their money. Below is a set of tax benefits for making superannuation contributions:

Pre-tax contribution

• For all concessional contributions: Taxed at a rate of 15% for all concessional contributions, which is lower than most people’s tax margin.

• For Salary sacrifice: Salary sacrifice is an arrangement between an individual and his/her employer to contribute a portion of pre-tax gross pay directly into superannuation account. It can effectively reduce an individual's assessable income, and therefore their income tax expenses.

Personal contributions

From 1 July 2017, an individual can claim for tax deduction for voluntary personal contributions into the superannuation account.

Low-income superannuation tax offset

If an individual’s annual income is $37,000 or less, they may receive up to $500 payment from the government based on their concessional contribution amount.

Government co-contributions

If an individual’s annual income is below $53,564, they may be entitled to receive up to $500 payment from the government for non-concessional contributions.

Spouse superannuation tax offset

An individual may be entitled to claim for tax offset of up to $540 if they contributed to their spouse who earns low or no income.

2. Other Benefits

Apart from tax saving, individuals may also be eligible for the following benefits:

First home super scheme

A First Home Buyer can withdraw up to $15,000 of their voluntary contributions in any one financial year, or a maximum of $30,000 across all years if they are going to purchase their first house.

Downsizing contribution

For eligible individuals who are above 65 years old, they may be entitled to make a downsizer contribution of up to $300,000 from the proceeds of selling their properties. The downsizing contribution will not count towards any contribution caps.

Overall, there are many welfare benefits under the superannuation scheme, individuals should consider the above benefits with their investment objectives and personal situation to decide whether additional superannuation contribution is a suitable strategy.

Disclaimer:

All contents presented in this blog have been prepared for informational purposes only, and are not intended to provide, and should not be relied on for any personal investment, tax, or accounting advice. You should, before making any decision regarding any information, strategies or product mentioned on this blog, consult your own financial or accounting advisors to consider whether the product is appropriate for you, based on your own objectives, financial situations and needs.