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Strategies to bulk up your super before retirement

To retire comfortably, you should be doing everything you can while still in the workforce to make sure your superannuation is as fruitful as possible.

Consider the following:

Consolidate super into one account
Super account fees can eat away at your super balance, especially if you have numerous accounts. If you find yourself in this position, take the time to organise your super contributions into the one account to reduce unnecessary and excessive fees.

Outstanding super payments
Check you have been paid all the super you are entitled to, as well as interest, as this can uncover large amounts of unpaid super. Employers have a legal obligation to pay all employees who have earned more than $450 in the space of a month, and these payments are required to be paid at least quarterly. If you have not been paid what you are owed, you are also missing out on accumulated interest. It is now compulsory for employers to report the super contributions they make, but this was not always the case, meaning you may need to contact previous employers or the ATO to access unpaid super you are entitled to.

Salary sacrifice
This is an efficient way to grow your superannuation while also incurring worthwhile tax benefits. To practice salary sacrificing, you will have to come to an agreement with your employer. You can contribute money from your pre-tax salary into your superannuation account, on top of the 9.5 per cent SG contribution that your employer must make. You will only be taxed 15 per cent on this additional contribution amount, but it does mean taking home a smaller figure each paycheck.

Spousal contributions
If your spouse is a low-income earner who is receiving less than $13,800 annually, you can contribute up to $3,000 into their super each year while getting an 18 per cent tax offset. This can save you up to $540 in tax.

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News

Tax on super death benefits for dependants vs non-dependants

July 9, 2020

A super death benefit is the super paid after a person’s death, usually to a nominated beneficiary. These benefits are subject to different tax treatments, depending on whether the beneficiaries are dependant or non-dependant.

Superannuation death benefits will generally be received tax-free by tax dependants, who are considered to be:

Dependants will not have to pay tax on the tax-free component of their super in the event that they:

However, they will be taxed at their marginal rate if they receive a capped benefit income stream and:

Not all super death benefits are subject to tax; for non-dependants, there is a taxable portion. This component is largely made up of after-tax super contributions that the deceased member has made.

Super death benefit payments are subject to tax when:

Non-dependants must calculate how much money in the super account is a:

The amount of tax non-dependants pay will be based on their marginal tax rate, however, this amount may be reduced by tax offsets. For the taxed element of the taxable component, the effective tax rate is your marginal tax rate of 17% (whichever is lower). For the untaxed element of the taxable component, the effective tax rate is 32% or your marginal tax rate (whichever is lower).