Super is the great Aussie tax dodge

SUPERANNUATION has never been seen as sexy, and its popularity is under a cloud amid government rule changes.

However, this $2.6 trillion pile of wealth that collects at least 9.5 per cent of the wages of most workers remains Australia’s biggest tax dodge, financial planners say.

Dodging tax is not tax evasion – which is illegal – but simply minimising how much of your money the government gets, says author and certified financial planner

Patrick Canion.

“It’s almost your patriotic duty to minimise your tax legally, unless you think politicians are better at spending your money than you are,” he said.

“If you believe that, then pay as much tax as you can.”

Mr Canion said the 15 per cent tax rate on money paid in by employers, salary sacrifice and other personal contributions was well below the 21-49 per cent tax most people paid on their income.

Once retired, your tax rate is typically zero on earnings, capital gains and withdrawals. “That is a really big reward – it’s saying thank you for hanging in there, providing for yourself and not relying on the taxpayer,” Mr Canion said.

Self-managed super funds have been used by wealthy Australians to dodge tax for years, which is why the Federal Government last July capped the amount held in a retiree’s super pension at $1.6 million.

SMSF Association head of policy Jordan George said super remained a taxeffective

savings vehicle despite the changing rules. “Before retirement all earnings in super are taxed at 15 per cent. This is below most people’s marginal tax rates and lower than most other investments,” he said.

“Once retired, your earnings on superannuation assets are tax-free on the first $1.6 million you have in savings. Over this amount earnings are taxed at the low-rate of 15 per cent.”

“You can still make up to $25,000 in pre-tax contributions… and up to $100,000 in post-tax contributions per year,” Mr George said.