Australians can boost their superannuation and halve the amount of tax they pay.
From July 1, 2021, workers will be able to put up to $27,500 a year into their retirement savings, up from $25,000, and only pay 15 per cent tax.
That is half the usual marginal tax rate of 32.5 per cent for most workers earning between $45,001 and $120,000 a year.
The 15 per cent concessional rate is a third of the 45 per cent rate for those earning more than $180,000.
Accountant Ben Johnston, the director of Johnston Advisory, said workers could ask their employer to top up their superannuation through salary sacrificing.
Australians can boost their superannuation and halve the amount of tax they pay. From July 1, 2021, workers will be able to put up to $27,500 a year into their retirement savings, up from $25,000, and only pay 15 per cent tax (stock image)
‘A lot of people don’t appreciate, when your money goes into super through your employer, and through salary sacrifice, it’s taxed at 15 per cent in your fund,’ he told Daily Mail Australia.
‘That’s why it’s so attractive. I actively encourage my clients that are in their early twenties to find any sort of hole in their budget – $20, $30 a week to start making additional super contributions.’
Superannuation savings also come with compound interest after many years.
‘It could have potentially an enormous impact – with compounding, if someone did it for $1,000 or $10,000, no matter what, it’s going to have a fundamental benefit,’ Mr Johnston said.
‘The earlier that you do it, in age, the more than you do it in dollar terms, it’s going to have a bigger and bigger impact.
The Association of Superannuation Funds recommends a single Australian needs $535,000 to retire comfortably but most workers don’t have nearly enough.
Accountant Ben Johnston, the director of Johnston Advisory, said workers could ask their employer to top up their superannuation through salary sacrificing (stock image)
Australians who want to claim a super contribution as a tax deduction need to fill out a lodge a notice of intent form with their super fund so it’s taxed at the concessional rate of 15 per cent.
From July 2022, the $450 month earning threshold is being scrapped before workers receive compulsory super contributions from their employer, with the Budget measure designed to help the low-paid and those in casual work.
Colonial First State, a retail super fund, calculated that under super existing rules, a 30-year-old woman with $50,000 in retirement savings would only have $57,651 by the time they turned 40.
The Association of Superannuation Funds recommends a single Australian needs $535,000 to retire comfortably but most workers don’t have nearly enough (stock image)
But this same woman, who took some time out of her career to raise children, would have $64,485 in superannuation within a decade under the scrapping of the $450 a month threshold – a $6,824 difference.
From July 1 this year, the compulsory super guarantee is increasing from 9.5 per cent to 10 per cent.
They will be increasing in half a percentage point at the start of each financial year until it reaches 12 per cent by July 2025.
Women, in particular, are urged to top up their superannuation, as their average balances stood at $73,139 in December 2020 – a 17.8 per cent gap compared with the average male balance of $88,934, Colonial First State data showed.
Figures from Colonial First State’s 750,000 accounts showed its average super balances for all age groups stood at just $82,163 in December 2020.