Superannuation/Salary Sacrifice

[Nothing]

Yep, I set it up through Stake for $990. Entirely hassle free process, highly recommended if you're going down the SMSF route.

Thanks. I was looking at business property and they're a bit more expensive for that. Still good to have positive feedback. Cheers.

 

[whattagun07]

Question about pre-tax Super contributions;

I'm well under $250k per year, so i understand those contributions will be taxed at 15%.

My question is; when will that be taxed?

Tax return time? Should I be setting aside 15% to pay tax man?

Or are they taxed on the way in to my Super acc some how?

Or at the fortnightly pay? (I just started a fortnightly pre-tax contribution, and from what I can tell my tax on my payslip is exactly the same)

 

[Taylor]

I believe your super fund slices that tax off the amount you send them and forwards it on your behalf to the ATO, meanwhile your taxable income for the year excludes that total figure.

 

[whattagun07]

I believe your super fund slices that tax off the amount you send them and forwards it on your behalf to the ATO, meanwhile your taxable income for the year excludes that total figure.

ok thats pretty sweet.
It wouldn't be a huge amount, but I don't really fancy paying $ at tax time.
If Super only takes 85% of my contibutions and gives the rest back to ATO, that's pretty good!

 

[Nothing]

If you earn $100k and SS $10k of that you should end up with $8.5k in super (15% tax) and your taxable income will be $90k. Your out of pocket will be $6550 because you would normally pay 34.5% tax.

 

[Home Alone]

Question about pre-tax Super contributions;

I'm well under $250k per year, so i understand those contributions will be taxed at 15%.

My question is; when will that be taxed?

Tax return time? Should I be setting aside 15% to pay tax man?

Or are they taxed on the way in to my Super acc some how?

Or at the fortnightly pay? (I just started a fortnightly pre-tax contribution, and from what I can tell my tax on my payslip is exactly the same)

Most funds deduct on entry to the fund. The rare exception is a fund that deducts at the time they submit their quarterly tax return

But the main point is you have satisfied your tax obligation with declaring a pre tax contribution. And the obligation is on the super fund to pay the tax.

The ONLY time you would be subject to an end of year assessment is if you contribute above the annual maximum (which is the total of all pre tax concessional contributions and not salary or income based). And if you did, you have the option of the super fund making a partial payment for the amount.

On SM-S711B using BigFooty.com mobile app

 

[whattagun07]

Most funds deduct on entry to the fund. The rare exception is a fund that deducts at the time they submit their quarterly tax return

But the main point is you have satisfied your tax obligation with declaring a pre tax contribution. And the obligation is on the super fund to pay the tax.

The ONLY time you would be subject to an end of year assessment is if you contribute above the annual maximum (which is the total of all pre tax concessional contributions and not salary or income based). And if you did, you have the option of the super fund making a partial payment for the amount.

On SM-S711B using BigFooty.com mobile app

That's awesome! Thank you!
When I chose how much to contribute pre-tax, It was actually based off what I could afford post-tax. I think I'll up it again

 

[Home Alone]

That's awesome! Thank you!
When I chose how much to contribute pre-tax, It was actually based off what I could afford post-tax. I think I'll up it again

I am in no position to offer financial adice. If you think it is appropriate for you; go for it. I will draw your attention this years cap limit is $27,5k (both SG and these voluntary pre tax conts) raising to 30k next year. Any amount above that will attract additional end of year assessments mentioned previously.
And your lack of access to your money until a release condition ie retirement.

 

[whattagun07]

I am in no position to offer financial adice. If you think it is appropriate for you; go for it. I will draw your attention this years cap limit is $27,5k (both SG and these voluntary pre tax conts) raising to 30k next year. Any amount above that will attract additional end of year assessments mentioned previously.
And your lack of access to your money until a release condition ie retirement.

Thanks, yeah I won't be anywhere near the limit.
Just one of the ways that i'm re-arranging my savings and investments

 

[Happy Mastenator]

I am in no position to offer financial adice. If you think it is appropriate for you; go for it. I will draw your attention this years cap limit is $27,5k (both SG and these voluntary pre tax conts) raising to 30k next year. Any amount above that will attract additional end of year assessments mentioned previously.
And your lack of access to your money until a release condition ie retirement.

Also note, that they adjust and send you a bill for going over the limit several months after you’ve done your tax return so be sure to keep money aside from any return to pay it if you’re at risk. It’s stings otherwise

 

[Lunchtime]

Yes. I salary sacrifice as much as I can into my SMSF while staying below the concessional contributions cap.

I’d much rather pay 15% tax on my salary as super contributions than pay the marginal tax rate on taxable income.

As for the second question, it’s hard to say. Super is a conservative investment approach, but my wife and I have grown the balance of our SMSF by 250% since it’s inception in May 2012. We also purchased an industrial property for her business to operate from so the asset mix is property heavy compared to most funds. While the property hasn’t appreciated significantly in value, the income yield has been reasonable; and it’s allowed her to operate her business while it pays rent to our fund. The current asset mix is 55/35/10 shares/property/cash.

I'm 37 and I've been salary sacrificing (pre tax) contributions into my super since 2014. I contribute $375 salary sacrifice into super per fortnight then the employer contribute also - 11% fortnightly also. It will be 11.5% from July 1.

Super is a slow burn but a worthwhile investment strategy for retirement. My super fund is in Growth in terms of investment portfolio plan. My thinking is that whilst I'm young I should make the most of it and have my super in high risk/high reward. If the share market was to crash for example then I'd lose super but I'd still have enough time to make up for it.

 

[Lunchtime]

If you earn $100k and SS $10k of that you should end up with $8.5k in super (15% tax) and your taxable income will be $90k. Your out of pocket will be $6550 because you would normally pay 34.5% tax.

Correct. The new figure of $90k is what will be assessed as taxable income at tax time because that $10k salary sacrifice/pre tax has been sent to super fund and won't be included at tax time for assessment.

 

[Lunchtime]

From July 1, 2024:

Con

For those who are currently in passive funds, some info to consider:

Product Type	APIR Code	Asset Class/Type	Subsector	Return % (1 Year) (Cumulative)	Return % (3 Year) (Annualized)	Return % (5 Year) (Annualized)	Return % (10 Year) (Annualized)
Managed Fund		Australian Equity	Large Cap - Core	-2.49%	7.84%	9.13%	10.85%
Managed Fund		Australian Equity	Large Cap - Value	5.68%	3.11%	6.40%	10.84%
Managed Fund		Australian Equity	Large Cap - Core	-6.89%	4.45%	7.13%	9.76%
Managed Fund		Australian Equity	Large Cap - Value	8.21%	3.72%	5.65%	9.57%
Managed Fund		Australian Equity	Large Cap - Value	-3.49%	6.44%	6.87%	9.01%
Managed Fund		Australian Equity	Large Cap - Core	0.00%	4.33%	6.99%	8.94%
VAS	VAS	Australian Equity	Large Cap - Passive	-9.11%	2.57%	6.32%	8.86%
Managed Fund		Australian Equity	Large Cap - Multi	-3.86%	3.37%	5.65%	8.47%
OZR	OZR	Australian Equity	Large Cap - Passive	3.08%	7.09%	14.62%	6.80%
A200	A200	Australian Equity	Large Cap - Passive	-5.87%	3.61%	-	-

Returns sorted by 10yr returns (to June 30), the funds selected are some of the bigger names in managed funds. OZR included as reference but they are different because they are resources only. There are better performing Aus share funds but usually with a slant (resources, long/short, concentrated, boutique) that I haven't included.

Good active managers can (and do) outperform passive.

A lot of super accounts in the Growth investment portfolio are achieving around 10% so far. Mine is going at 10.4%. It's been a good financial year for super funds I think.

 

[Lunchtime]

I believe your super fund slices that tax off the amount you send them and forwards it on your behalf to the ATO, meanwhile your taxable income for the year excludes that total figure.

Yep this is correct.

ok thats pretty sweet.
It wouldn't be a huge amount, but I don't really fancy paying $ at tax time.
If Super only takes 85% of my contibutions and gives the rest back to ATO, that's pretty good!

Yeah its a good result I think.

 

[Lunchtime]

What are people's thoughts about Non-Concessional contributions? It's different from Concessional/Salary Sacrifice/pre-tax contributions into super.

Non-Concessional Contributions (after-tax):

Non-concessional contributions cap | Australian Taxation Office

Keep track of your non-concessional (after-tax) contributions, which are not taxed unless you exceed the cap.

www.ato.gov.au

From July 1 you can contribute a maximum of $120k of Non-Concessional contributions into super.

 

[Lunchtime]

I'm 29 years old and contributing an extra $300 a fortnight into super pre-tax. I have a mortgage but due to the low interest rates it's more effective for me to use that $300 a fortnight to put it into super due to higher returns and compounding interest. Markets will go up and down, as they have been for the last 100 years but they will give a nice return over the long term. There's no guarantee that I'll live to 60+ but statistically it's more likely than not with the average male life expectancy in Australia being 80. Ideally I plan to retire at 60 self-funded.

What I'd like to know - is there any sort of tracking available to show how one is going in terms of their super amount in thier account? For example, I'm male and I'm 37....in terms of a dollar figure....how much money should a 37 year-old male have in their super account?

 

[kriles76]

What are people's thoughts about Non-Concessional contributions? It's different from Concessional/Salary Sacrifice/pre-tax contributions into super.

Non-Concessional Contributions (after-tax):

Non-concessional contributions cap | Australian Taxation Office

Keep track of your non-concessional (after-tax) contributions, which are not taxed unless you exceed the cap.

www.ato.gov.au

From July 1 you can contribute a maximum of $120k of Non-Concessional contributions into super.

Its situational. I’m ten years your senior and contribute up to the concessional cap, but I’ve hitched my wagon to providing private school education for my kids so I need ready access to cash and assets outside of a vehicle that I can’t draw from for the next 12 years.

Non-concessional contributions typically come from income or assets taxed at your marginal tax rate (unless they’re gifted to you) so personally at your age, I’d rather use the cash or other assets to increase my wealth outside of super. If I was 57 and closer to draw down phase, I’m might have a different opinion.

 

[kriles76]

What I'd like to know - is there any sort of tracking available to show how one is going in terms of their super amount in thier account? For example, I'm male and I'm 37....in terms of a dollar figure....how much money should a 37 year-old male have in their super account?

Two years old but….

https://www.news.com.au/finance/superannuation/how-much-super-you-should-have-at-every-age-from-20-to-50yearsold/news-story/b0dcdce675565ea009f2eb1ebe7b7fe0?psafe_param=1&utm_source=SEM&utm_medium=PPC_SEM&utm_campaign={campaign}&gad_source=1&gclid=CjwKCAjwvvmzBhA2EiwAtHVrbxqaEoDmk7rxWOyvZWjd3PtIEOMNfN0NQ9gTBPBnbTmqFU21nuAzwxoCDp0QAvD_BwE

There are probably more reputable sources but this came up on the first page of a Google search.

 

[Lunchtime]

Two years old but….

https://www.news.com.au/finance/superannuation/how-much-super-you-should-have-at-every-age-from-20-to-50yearsold/news-story/b0dcdce675565ea009f2eb1ebe7b7fe0?psafe_param=1&utm_source=SEM&utm_medium=PPC_SEM&utm_campaign={campaign}&gad_source=1&gclid=CjwKCAjwvvmzBhA2EiwAtHVrbxqaEoDmk7rxWOyvZWjd3PtIEOMNfN0NQ9gTBPBnbTmqFU21nuAzwxoCDp0QAvD_BwE

There are probably more reputable sources but this came up on the first page of a Google search.

Handy info, thanks for that.