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Super guarantee frozen

Over the past week, the government has confirmed its decision to freeze the compulsory superannuation guarantee at 9.5% for the next seven years. It will rise to 10% in 2021 and then increase incrementally before plateauing at 12% in 2025. Previous to this, the superannuation guarantee was planned to reach 12% by the 2019/20 financial year.

In light of these changes, individuals may have to reconsider their approach to superannuation if they want to maintain their current retirement plans. If it is possible for you in your current circumstances, you may want to consider salary sacrificing into your super. This is also known as making concessional, or before tax, contributions. The advantage of salary sacrificing into superannuation is that it will be taxed at the low rate of 15% (as long as it is below the concessional contributions cap), which for most people is far less than their marginal tax rate. Even salary sacrificing as little as $10 a week into your superannuation can go a long way in counteracting the impact of the frozen superannuation guarantee.

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Reviewing your super

July 19, 2018

The ATO is encouraging taxpayers to review their super this tax time.

Finding lost super or consolidating any unwanted multiple accounts can make a massive difference to your nest egg.

There is over $18 billion in lost and unclaimed super. Those who have changed their name, address, job or lived overseas are at high risk of having lost super.

During the last five years, more than $10.7 billion of super has been consolidated from over 2.1 million accounts through ATO online services.

The ATO is also reminding taxpayers that the new super deduction is available. Most people under 75 years of age can claim a tax deduction for personal after-tax super contributions.

Personal super contributions deductions provide a level of flexibility for young people that change jobs frequently, self-employed contractors, small business employees, freelancers and people whose employers do not offer salary sacrifice arrangements.

To claim a deduction for any personal super contributions made in 2017/18, you must lodge a notice of intent to claim a deduction with your fund and receive a confirmation letter from them before lodging your tax return.