Rudy Haddad, ING's National manager of technical services gives you some tips on how you can make the most of your super.
Salary sacrifice into super
What is it?
Salary sacrificing to super simply means foregoing part of your wage or salary for equivalent super contributions.
Why do it?
Salary that is paid as superannuation contributions is taxed at just 15%, compared to the personal income tax rate of up to 45%. In addition, this is a great way to boost your superannuation balance and help you on your way to a more comfortable retirement. Use this strategy along with your new tax cuts and look at how they build up over time!
The graph below shows how Tom, who is aged 40 and earns $80,000 per year, could have – after 20 years – over $85,000 extra in his super by simply investing his tax cuts from the 2008 budget**. Think what you could do with the extra money in retirement. It could mean the difference between a small road trip and a trip around the world!
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 Tom (aged 40) earns $80,000 per year.
Rather than just salary sacrifice his income tax cuts, Tom decides to sacrifice 6% of his salary. This will give him an extra $188,754 in his super in 20 years, on top of his 9% compulsory super.
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How do I get started?
To set up a salary sacrifice arrangement, it’s recommended that you first obtain financial advice and then talk to your employer to make it happen.
After-tax contributions
hat are they?
These could be regular or one-off payments into your super from money that has already been taxed, such as a bonus payment or savings.‡
Why do it?
Contributing to your super from your take-home pay is an easy way to boost your super so that you can achieve a comfortable retirement. If Tom, who is aged 40 and earns $80,000 per year, invested his tax cuts from the 2008 budget as an after-tax contribution, he will have an extra $68,616 after 20 years.
How do I contribute to my super?
After-tax contributions can be made via BPAY or internet banking. Click here for details on how you can make an after-tax contribution.
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Once you have made an after-tax contribution of $1,000 or more, email us at employer.super@ing.com.au with your member number and quote ‘Laguna’ to go into the draw to win a Renault Laguna.§ |
Take advantage of a $1,500 bonus from the government
If you make an after-tax contribution into your super from your take-home pay and earn under $60,342 p.a. you may be entitled to a co-contribution from the government of up to $1,500.
Are you eligible?
You are eligible for a co-contribution for the 2008/2009 year if:
- your total income is under $60,342
- you lodge an income tax return
- you make an after-tax contribution to your super account
- 10% or more of your total income is from eligible employment and/or running a business
- you will be below 71 years of age at 30 June 2009
- you are not a temporary resident at any time during 2008/2009.
How does it work?
Make an after-tax contribution into your super fund and once the ATO has processed your tax return for the 2008/2009 year, the government co-contribution will be deposited into your super account. You don’t even need to apply.
Consolidate your super
Do you have three gym memberships or two health insurance policies? Then why have more than one super account?
Most Australians have more than one super account – meaning they may be paying multiple fees, receiving multiple statements and are having to keep track of several accounts.
Is this you? Complete and return the enclosed Rollover Form to consolidate your super and potentially win a Renault Laguna worth $50,000.
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For a chance to win a Renault Laguna worth $50,000‡ make an after-tax contribution of $1,000 or more via BPAY® or Internet banking into your Integra Super or Corproate Super account before 3 November 2008. |
For more information on how you can boost your super visit the Learning Centre. Make sure you talk to your financial adviser before implementing any super strategies.
* Source: Westpac/ASFA (2004). How much do you need to spend to have a comfortable Standard of Living in Retirement? ASFA Research Centre: www.superannuation.asn.au
** Assumptions for case study: Client earning $80,000 p.a. (31.5% marginal tax rate applies). Income tax savings compared to 2007/08 - 08/09 $1,100, 09/10 $1,250, 10/11 $1,550. Australian equities portfolio (3% p.a. income (20% franked), 5% growth). Benefits shown net of all taxes (withdrawn on or after age 60).
† It is assumed there is no reduction in an employee’s entitlements (e.g. Superannuation guatantee (SG)) as a result of salary sacrificing into superannuation.
‡ Annual caps on contributions apply, please speak to your financial adviser if you require further information.
§ Terms and conditions of entry apply and are available at www.ing.com.au/downloads/12622.asp The promoter is ING Custodians Pty Limited (ABN 12 008 508 496, AFSL 238346, RSE L0000673). Licensed under NSW Permit no. LTPS/07/29392, ACT TP 07/05391, SA Licence no. T07/5444 and VIC Permit No. 07/5787.
® Registered to BPAY® Pty Ltd ABN 69 079 137 518.
