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Investing in your super

People often overlook the advantages of making significant concessional contributions to their superannuation. By investing large sums of money inside your super, as opposed to assets outside of your super, you may end up saving a significant amount on your tax bill.

Concessional superannuation contributions are voluntary amounts that you contribute from your after-tax income. These are different from non-concessional contributions or before tax contributions. If you are under the age of 50, you may contribute up to $30 000 before tax to your superannuation, and if you are over 50, the limit is $35 000.

When you make concessional contributions to your super you do not have to pay any additional tax, as you will have already paid tax at your marginal rate. You may contribute up to $180 000 of your after-tax income each year to your super.

The advantage to investing within your superannuation fund is that all investment returns will be taxed at the flat rate of 15%. If you are thinking about making investments that will serve you in retirement you may care to investigate making larger concessional contributions to your superannuation.

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News

How to catch out an illegal super scheme

April 18, 2018

When a super scheme seems too good to be true, it often is. Many illegal super schemes are operating in Australia, so it is crucial to understand the characteristics of such schemes.

A popular illegal scheme is one whereby an individual is enticed by being told they can access their super early to pay off a credit card debt, go on a holiday, buy a car and so on. Generally, such schemes are illegal as superannuation can only be accessed early by meeting a condition of release.

Those promoting such schemes usually:
– Encourage individuals to transfer super from an existing super fund to an SMSF to access super before they are legally entitled to;
– Target those under financial pressure or who do not understand the super laws;
– Claim you can use your super for anything you want;
– Charge high fees and commissions, and risk losing some or all of the individuals super to them.

Unfortunately, participating in these schemes subject the affected individual to identity theft from the promoter of the scheme. Identity theft is when someone uses another person’s details to commit fraud or other crimes.

Individuals need to be aware that super is usually only accessible once the preservation age is reached and they stop working. The preservation age is currently 55 years old for those born before 1 July 1960 and 60 years old for those born after 30 June 1964.

Superannuation can only be accessed early in special circumstances such as severe financial hardship and for specific medical conditions. There are severe penalties for illegally accessing your super early.