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The 'Better Super' changes introduced in 2007 reduced complex rules and tax restrictions and provide more flexibility in how Australians can manage their super and provide extra benefits for the self-employed.
Making the most of your super
Generally, the overall tax paid on your super investment is less than traditional forms of investment. Super is concessionally taxed which may result in more funds being available for investment than if you invested in a non-super environment.
Additionally, the significance of concessionally taxed savings is further enhanced by the compounding of concessionally taxed investment earnings.
A better deal for the self-employed
'Better Super' measures that were introduced have made super more attractive for the self-employed. Up to age 75, the self-employed may be able to claim up to 100% of their super contributions as a tax deduction. Self-employed people may also be eligible to access the Government's co-contribution scheme.
Concessional and non concessional contributions caps
Most individuals may make larger concessional contributions (i.e. employer, salary sacrifice and personal contributions claimed as a tax deduction) to their super at the tax rate of 15%. There is currently an annual cap of $25,000 on these types of contributions.
Business owners can also make a non tax deductible personal contribution from after tax income to super of $150,000 p.a. (or up to $450,000 averaged over three years).
Co-contribution is a strategy where the Government pays up to $1 for every $1 that an eligible person contributes (up to a maximum co-contribution of $1,000 per annum) into super. The amount of co-contribution depends on your assessable income plus reportable fringe benefits, generally the less you earn the more you will get from the Government.
Transition to retirement
The 'Better Super' rules also provide more options when transitioning from work into retirement. If you're over preservation age (currently 55) and still working, you may choose to access your super as regular income through a transition to retirement pension. These pensions provide you with an income stream and allow you to choose your payment amount up to a defined threshold and frequency. This has the potential to increase your after tax income by drawing on your superannuation.
One option under the Transition to Retirement strategy is to continue working full time, receive a Transition to Retirement pension and make additional contributions to your super. This strategy gives you control over your working hours and allows you to tap into the benefits of investing with super.
Your ANZ Business Bank Financial Planner can deliver a comprehensive plan for your employer superannuation. They'll help you to understand your obligations and manage compliance issues with regards to the Superannuation Guarantee. Your Planner can also enhance your employee superannuation offering, helping you to position yourself as an employer of choice within your industry. Your employees will have access to top rated superannuation options and benefit from our expert advice on retirement planning and funding.
Make an appointment with an ANZ Business Bank Financial Planner, contact your Relationship Manager or call ANZ Financial Planning on 1800 626 855, Monday to Friday 8am to 8pm EST.
Any advice does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you.
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