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Building your Superannuation Balance

8.08.2019 by Jessica Hall

There are two types of contributions that can be made to your super account, concessional contributions and non-concessional contributions:

1. Concessional contributions include compulsory employer contributions, salary sacrifice contributions and personal contributions claimed as a tax deduction.
2. Non-concessional contributions include, but aren’t limited to, personal contributions that have not been claimed as a tax deduction (referred to as “after-tax contributions”).

After-tax contributions
What's the potential benefit of making after-tax contributions?

Making after-tax contributions to your super can be an effective way to increase your retirement savings. By setting up small, after-tax contributions today, you could boost your super balance.

Who can make after-tax contributions?
You can make after-tax contributions if you’re aged 64 and under, or if you’re between age 65 and 74 and meet the work test (which means you’re working at least 40 hours over 30 consecutive days in the financial year the contribution is being made).

Why should I invest in super?
Investing in super can be a tax effective way to boost your super and save for your retirement. The Association of Superannuation Funds of Australia (ASFA) provides a detailed description of what singles and couples who are relatively healthy and own their own home would need to budget per year to be able to enjoy life.

Concessional Contributions
Making concessional contributions can be an effective way to boost your super and reduce your assessable income. Concessional contributions include compulsory employer contributions, salary sacrifice contributions and personal contributions claimed as a tax deduction.

What are the potential benefits of making concessional contributions?
If you make a personal super contribution, you may be able to claim the contribution as a tax deduction and reduce your assessable income.

Depending on your circumstances, making concessional contributions could result in a tax saving of up to 32% and enable you to boost your super.

What contribution caps apply to concessional contributions?
A cap applies to concessional contributions (including compulsory employer contributions) made to super. Since 1 July 2017, the cap is $25,000 for everyone. Penalties apply if you exceed the concessional contribution cap.

Who can make concessional contributions?
All individuals who are eligible to make a personal contribution to super are able to claim a tax deduction.

You can make personal super contributions (concessional or non-concessional) if you’re aged 64 and under, or if you’re 65 - 74 and meet the work test (which means you’re working at least 40 hours over 30 consecutive days in the financial year the contribution is being made)

How do you claim the tax-deduction?
To be eligible to claim the personal super contribution as a tax deduction, you need to submit a valid ‘Notice of Intent’ form to your super fund. You’ll also need to receive an acknowledgment from the super fund before you complete your tax return, start a pension or withdraw or rollover money from the fund to which you made your personal contribution.

To determine if you’re eligible give our office a call.

Source: MLC

This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs.

GTC Financial Services Pty Ltd ABN 69 596 897 575 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

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Topics Superannuation, Retirement Planning, Wealth creation

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