For many people, compulsory super won’t be enough to fund a comfortable retirement. Contributing a little extra can make a surprisingly big difference to your savings – it all adds up.
To ensure you retire with enough to afford occasional splurges here and there, you can put a little extra into your super. There are a few ways you can boost your super but which one will work best for you depends on your circumstances.
If you start thinking about it now, you’ll have plenty of time to make additional payments into your super ahead of the June 30 deadline.
A concessional contribution is an amount that’s been added to your super before tax, such as your 9.5% employer contribution or salary sacrifice, and are taxed at 15%. Comparing that to your marginal tax rate, putting money into super may be a tax effective solution for you.
Also, if you salary sacrifice, you may reduce your taxable income while increasing your super!
More information about growing your super can be found here.
Non-concessional contributions are voluntary after-tax payments such as direct debits or one-off lump sums. Since this money has already been taxed at your marginal tax rate, it will not be taxed when it comes into super.
If you have a lower income, non-concessional contributions may be effective for you as the government’s co-contribution (GCC) scheme could reward you with up to $500 of extra super when you invest $1,000.
More information about GCC can be found here.
If you’re over the age of 65, the government has introduced an opportunity for you to boost your retirement savings by contributing up to $300,000 from the proceeds of the sale of your main residence into superannuation. And the best thing is, the amount you contribute under the downsizer initiative is exempt from the non-concessional cap.
More information about Downsizing can be found here.
Many employees take time off work to raise children or care for loved ones, so the super system offers a few ways in which couples can make sure their super is adequate.
Your spouse can make contributions into your account at any time, but if you’re on a low income, they could also get a tax rebate. A spouse contribution (which is non-concessional) of $3,000 could get them a tax offset of $540!
Don’t forget there are annual caps that apply and other conditions, so make sure you go to the Australian Taxation Office (ATO) website first.
You can ask Vision Super to transfer up to 85% of your spouse’s financial year’s taxed splittable contributions. These are generally any concessional contributions their employer made for them.
You or your spouse can contact Vision Super for details of what contributions were made and whether they can be split. The regular contribution caps apply and make sure you look at the ATO website for more information.
The regular caps apply and make sure you look at the ATO website for more information.
June 30 deadline
While there are great opportunities to put money into super, annual limits apply. You can’t put everything into super to pay less tax, but if you’re under the limit, there’s still time to contribute.
Concessional contribution cap : $25,000 for the 2018/19 financial year and this amount includes your employer Superannuation Guarantee.
Non-concessional contribution cap : $100,000 for the 2018/19 financial year, but if you’re under the age of 65 you can use the “Bring Forward Rule”, where you can contribute three years of the cap in the one year but it means you can’t put any more in for the next two financial years.
There are a few ways you can make a payment:
- BPAY with your account specific reference number
- EFT to Vision Super’s bank account
- Cheque addressed to Vision Super and delivered to our offices in Melbourne CBD.
Just contact Vision Super for the relevant forms and account numbers.