Super for young people part 2

How your money goes into super

Because super is low tax (taxed at 15% often when it goes in the 15% tax on earnings and often tax free now when it comes out) – the government have made sure that you can only contribute a certain amount each year (so there are limits to how much the wealthy can use it to reduce their tax)

 Your Employer – 9% Super Guarantee

-          For all employees who earn more than $450 a month – employers must put in 9% of the total payment into super. i.e. if your salary was $1000 a month – your employer should put in $90 into your nominated super fund.  (if you earn under $450 a month your employer may put in 9% just because they like you).

 Your contributions

You can put your own money into super. The government has recently limited the amount you can contribute per year – The maximum for under 50 is $25,000, and $50,000 if you are over 50. These amount include employer amounts (the 9% above)

Self-employed – or people who have less than 10% of their income from employment – may be able to claim a tax deduction for a super contribution.  (Note when you claim a tax deduction you pay 15% contributions tax in your super fund –here is where it is worth speaking to an accountant/financial planner to get the best outcome for you).

 No tax deduction– you can put in money where you are not claiming a tax deduction. For young people – they might be trying to get the government Co-contribution (see more below).

Super is an area to get advice

If you are considering putting money into super – please get advice. This article is only meant to be general information and given the complexity of the rules may be incorrect for your circumstances.

Posted in Superannuation

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