Superannuation and the strict rules surrounding it can sometimes be quite confusing, so much so that this can often be off-putting to those who are looking to build their wealth through superannuation for retirement.
In this piece we thought we would help break down the different ways you can contribute the superannuation environment and the strategies you could consider to help accelerate the growth of your retirement benefits for the long-term
1. Concessional contributions
This is the most tax-effective way of contributing money into super as you are eligible for a tax deduction for the contributions made. There are two ways you can make a concessional contribution.
Firstly, as salary sacrifice through your employer where additional funds are taken out of your regular wage or salary and contributed to super on your behalf. Alternatively, you can also make a contribution using money you have already been paid and claiming a tax deduction at the end of the year.
There is currently a cap on concessional contributions of $25,000 per year.
2. Non-concessional contributions
This type of contribution does not attract a tax benefit. It is made from money that has already had tax paid on it and simply allows you to add more funds to superannuation to boost the value of your funds. This may be done to take advantage of the lower tax rate within the superannuation environment however, like all superannuation monies, is restricted in the way of accessing the funds before retirement.
The current cap on these types of contributions is $100,000 per year.
Adding funds to superannuation at an early age can make a significant difference to your final retirement benefits over the long-term.
Superannuation rules and restrictions are quite complicated, and you should always consider seeking advice prior to making any additional contributions to your superannuation fund.
More information
If you'd like to learn more about contributing to superannuation and the strategies you can implement to grow your funds, please feel free to contact the Morgans Toowoomba office on (07) 4639 1277.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
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