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).
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.