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Superannuation - Benefits
Superannuation savings are one of the most tax effective ways of saving for the long term. The government are concerned that you will retire with no savings and fall back on the state. As a result they have developed a series of tax breaks around Superannuation to encourage you to save within Super funds.
One of the largest tax breaks is by using salary sacrifice. Contributions made pre tax direct from your salary are only liable to 15% tax, saving a 45% taxpayer 30% that would of otherwise gone to the government.
In most scenarios these tax rates are lower than investing outside of a Superannuation fund. For example, owning the investments in your own name can potentially mean paying tax on income and capital gains at the top marginal rate of 46.5%. A Super fund allows you to potentially ‘wrap’ a tax effective structure around investments. Income of Superannuation funds is generally taxed at 15% and capital gains are taxed at 10% provided the assets are owned for at least 1 year.
Once the Superannuation fund starts to pay an allocated pension then no tax is payable* on income or capital gains accrued on those assets relating to the pension.
You have the right to choose to contribute to a superannuation fund of your choice. Contact us to advice you on the most appropriate fund for you.
A major advantage of superannuation is that money up to your pension Reasonable Benefits Limit (RBL) is protected from creditors or in the event of bankruptcy. This means professionals and small business owners can legally protect business premises and certain assets in the event that that something beyond their control happens.
