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Grow your super by making extra contributions
Super remains one of the best ways to save for your retirement due to the tax concessions it offers.
Relying solely on your employer’s super guarantee contributions may not be enough to provide you with a comfortable retirement. By contributing extra money to your super, your super balance will grow more quickly, giving you more money to enjoy in retirement.
You can ask your employer to set aside some money from your before-tax salary and put it directly into your super.
What are the benefits?
What are the limits to salary sacrificing?
There is no limit, however contribution caps are in place restricting the amount of money that can be salary sacrificed into super before additional tax is payable. The concessional cap is $27,500 and includes your employer's compulsory super contributions. If you exceed the cap, the excess will be taxed as income in your hands and you have a choice of either having those contributions returned or added to your non concessional cap.
Some things you may need to consider
Salary sacrificing into super may not suit everyone. You should consider some of the possible impacts:
Any contributions you make to super with your after-tax money are classified as either non-concessional or concessional contributions. The main differences between the two different types of after-tax contributions are:
If you make a contribution to super with your after-tax money and then claim a tax deduction for the amount you contributed, it is classified as a concessional contribution. Concessional contributions are taxed at 15 per cent in your super fund.
If you make a contribution with your after-tax money and do not claim a tax deduction for the amount you contributed, it is classified as a non-concessional contribution. These contributions are not taxed in the super fund.
The co-contribution scheme was introduced by the Government to encourage and boost the super savings of low income earning Australians. If you are eligible, you can have your personal contributions matched up to a maximum of $500.
You may be eligible for the co-contribution if all of the following apply:
To take advantage of the government’s matching, you can contribute up to $500 into super as a personal after-tax contribution where your total income is less than $41,112. The co-contribution reduces for incomes over this threshold and ceases for incomes above $56,112.
You may want to speak to your financial adviser before deciding to make extra contributions to super. If you don't have an adviser, we can help you find one.
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