It makes sense to put ex­tra dol­lars into su­per

Fraser Coast Chronicle - - COMICS, PUZZLES - AN­THONY KEANE

CHANGES to su­per­an­nu­a­tion laws have boosted the ben­e­fits of putting ex­tra cash into your fund be­fore June 30.

While su­per funds have been crit­i­cised lately af­ter a scathing Pro­duc­tiv­ity Com­mis­sion re­port, they re­main the low­est­tax place for re­tire­ment sav­ings, and the 2016 Bud­get changes that came into force last July made it more flex­i­ble.

The most pos­i­tive change has given work­ers the chance to make tax-de­ductible con­tri­bu­tions – known as con­ces­sional con­tri­bu­tions – to their funds at any time. Pre­vi­ously this could only be done through salary sac­ri­fice, or by self-em­ployed peo­ple.

“This is the first year that em­ploy­ees can put some ex­tra money into su­per and claim a tax de­duc­tion on their tax re­turn, said dmca ad­vi­sory direc­tor Ta­nia Tonkin.

The cap for tax-de­ductible con­tri­bu­tions is $25,000 a year and in­cludes em­ploy­ers’ com­pul­sory su­per pay­ments. Ms Tonkin said peo­ple could check their pay slips and su­per funds to find out how much room they had to in­ject ex­tra this month.

An­other change is the re­lax­ing of the spouse con­tri­bu­tion rules that de­liv­ers peo­ple a $540 tax off­set – ef­fec­tively a cash­back deal – if they pay $3000 into the su­per of a low­in­come spouse. Be­fore, the spouse had to earn be­low $10,800 to qual­ify for the full ben­e­fit, now it’s $37,000. “If a spouse is work­ing part­time, it’s likely they will fall un­der that,” Ms Tonkin said. She said the new First Home Su­per Saver Scheme al­lowed peo­ple to make a vol­un­tary $15,000 an­nual con­ces­sional con­tri­bu­tion into su­per now, then with­draw it later for a house de­posit. This means peo­ple can po­ten­tially con­trib­ute sav­ings they al­ready have, claim a tax de­duc­tion for this year, then with­draw it later to use for their de­posit, but they should get pro­fes­sional ad­vice.

“I think that’s a big thing that there hasn’t been enough said about,” Ms Tonkin said.

Fi­nan­cial strate­gist Theo Mari­nis said this year’s in­creased su­per con­tri­bu­tion flex­i­bil­ity de­liv­ered a “mas­sive tax de­duc­tion” for work­ers on av­er­age wages who could add more than $15,000 and get thou­sands in tax sav­ings.

“If you can’t af­ford $15,000 you don’t have to. You can do $1000, $5000 or what­ever you want as long as you don’t ex­ceed the $25,000 cap, which is in­clu­sive of what your em­ployer put in,” he said. “These are some of the good things that came out of all the changes last year.”

Bad su­per changes – such as re­duc­ing the con­ces­sional con­tri­bu­tion cap from $35,000 to $25,000 for older Aus­tralians – made it im­por­tant to start sav­ing early, Mr Mari­nis said.

Other su­per in­cen­tives re­main, in­clud­ing the $500 co­con­tri­bu­tion for peo­ple earn­ing be­low $36,813 who make af­ter­tax pay­ments into their su­per. It’s ef­fec­tively a 50 per cent re­turn on your in­vest­ment.

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