As a North Lakes resident, it is important to think about your superannuation contributions and how they can impact your retirement savings. Superannuation is a tax-effective way to save for retirement, and there are several ways you can maximise your contributions.
Concessional contributions are contributions made to your superannuation fund before tax. These contributions are taxed at 15% when they are received by your super fund. Concessional contributions include employer contributions, salary sacrifice contributions, and personal contributions claimed as tax deduction. The maximum amount of concessional contributions you can make each financial year is currently $27,500.
One way to maximise your concessional contributions is to salary sacrifice. This is where you arrange with your employer to make additional contributions to your super fund from your pre-tax salary. This can reduce your taxable income and increase your retirement savings.
Non-concessional contributions are contributions made to your super fund from your after-tax income. These contributions are not taxed when they are received by your super fund. The maximum amount of non-concessional contributions you can make each financial year is currently $110,000.
If you have reached your concessional contribution cap, making non-concessional contributions can be a good way to increase your retirement savings. However, it is important to be aware of the non-concessional contributions cap and the associated penalties if you exceed it.
If you earn less than $54,837 per year, the government may make a co-contribution to your super fund when you make after-tax contributions. The maximum co-contribution amount for the 2021-22 financial year is $500, and the amount you receive will depend on your income and the amount of after-tax contributions you make.
To be eligible for the government co-contribution, you must meet certain criteria, including making after-tax contributions to your super fund, being under the age of 71, and having a total superannuation balance of less than $1.7 million.
If your spouse earns less than $40,000 per year, you may be eligible for a tax offset of up to $540 when you make after-tax contributions to their super fund. This can be a good way to boost your spouse’s retirement savings and reduce your overall tax liability.
To be eligible for the spouse contributions tax offset, you must make after-tax contributions to your spouse’s super fund and your spouse’s income must be less than $40,000 per year.
Under the Superannuation Guarantee, your employer is required to contribute 10% of your ordinary time earnings to your super fund. This is in addition to any salary sacrifice or personal contributions you make. The Superannuation Guarantee applies to all eligible employees, including full-time, part-time, and casual employees.
It is important to check that your employer is making the correct Superannuation Guarantee contributions on your behalf. If you are self-employed, you are also responsible for making your own Superannuation Guarantee contributions.
In conclusion, there are several ways you can maximise your superannuation contributions as a North Lakes resident. By taking advantage of concessional and non-concessional contributions, government co-contributions, spouse contributions, and the Superannuation Guarantee, you can increase your retirement savings and reduce your tax liability.
At Total Business Partners, we can help you with all aspects of superannuation and retirement planning. Contact us today to find out how we can help you maximise your superannuation contributions and achieve your retirement goals.