Pay less tax now and maximise your super cap
The opportunity to make larger tax-effective contributions from your pre-tax money just before you retire is limited.
So it’s really important you make the most of your contribution cap* each financial year to boost your super balance (if your cashflow allows).
What are concessional contributions?
Concessional contributions include employer contributions (such as the superannuation guarantee and contributions made under a salary sacrifice arrangement) as well as personal contributions claimed as a tax deduction.
These contributions are taxed in the fund at a maximum rate of 15%, which is likely to be lower than the marginal tax rate you pay on your salary or other sources of income. (Although, the Government is planning on increasing this rate for some people who earn a high income).
Contributing before 30 June could mean you pay less tax this financial year and have more money for when you retire.
Maximise your cap
Concessional super contributions currently are capped at $25,000 for this financial year and if you don’t use all of them, you can’t carry forward any unused amount to another financial year.
So it really is a case of use it or lose it. The loss being not taking full advantage of your concessional contribution cap each year between now and when you retire.
But don’t overdo it
While super is a very tax-effective place to save for retirement, the benefits can unwind if you put in too much.
Concessional contributions that exceed your cap are taxed at a penalty rate of 31.5% and that’s in addition to the usual tax of 15% that’s payable on these amounts.
We can review your retirement goals years before you retire, and put together a contribution plan that makes the most of your opportunities, without triggering unnecessary tax bills.
If you would like more information, please contact Vertex Group Pty Ltd on (03) 9832 0677 or enquiry@vertexgroup.com.au.
* Concessional super contributions currently are capped at $25,000 pa, regardless of your age. The government has proposed to increase this cap to $35,000 pa from 1 July 2013 for people aged 60 and over, and 1 July 2014 for people aged 50 and over.
This document contains general information only. MLC GROUP is not a registered tax agent. If you wish to rely on this document to determine your personal tax obligations, you should consult with a Registered Tax Agent. In preparing this information, MLC GROUP did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, a person needs to consider (with or without the advice or assistance of an adviser) whether this information is appropriate to their needs, objectives and circumstances. This information is based on our interpretation of relevant superannuation, social security and taxation laws as at 1 July 2013.