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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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  • Super co-contributions

    October 18, 2017

    Individuals may be eligible for a Government super co-contribution.

    A Government co-contribution means the Government adds to your super. You may be eligible for the super co-contribution, low-income super contribution (LISC) from the 2012-13 to 2016-17 financial years, or low-income super tax offset (LISTO) from 1 July 2017.

    Super co-contribution
    The Government will make a co-contribution of up to $500 if you are a low or middle-income earner and make personal (after-tax) contributions to your fund.

    The eligibility conditions for a co-contribution from the 2017-18 financial year include:
    a total superannuation balance less than the general transfer balance cap for that year
    the contribution you made to your super fund must not exceed your non-concessional contributions cap for that year.

    Low-income super contribution
    The low-income super contribution (LISC) is a Government super payment of up to $500 to help low-income earners save for retirement.

    If you earn $37,000 or less a year, you may be eligible to receive a LISC payment directly into your super fund.

    The LISC is 15 per cent of before-tax super contributions made you or your employer from the 2012-13 to 2016-17 financial years.

    If you have reached your ‘preservation age’ and are retired you can apply to have your LISC paid directly to you.

    Low-income super tax offset
    The low-income tax offset (LISTO) was introduced from 1 July 2017. If you earn income up to $37,000, you may be eligible to receive a refund into your super account. This is on the tax paid on your concessional super contributions up to a cap of $500.

    This means most low-income earners will pay no tax on their super contributions.