Why a super investment?

Super investments are in some ways very similar to non-super investments. With either you can invest in a range of assets such as Australian shares, International shares, bonds, cash and property. By contributing to your investment on a regular basis you can watch your capital grow over time through the power of compounding. While a super investment can’t generally be accessed until later in life, the tax advantages you can gain are a key reason why investing in super can maximise your investment returns.

What are some of the advantages of investing in super?

Save tax on investment earnings
A low maximum tax rate of 15% applies on your investment earnings within super. If you had the money invested elsewhere then the tax on the investment earnings would normally be at your marginal tax rate of up to 46.5% including Medicare Levy.

Save tax by salary sacrificing
When you contribute into your super fund with pre-tax dollars (salary sacrifice), your contribution is only taxed at 15% or less. If you received this as part of your salary, it would be taxed at your marginal tax rate of up to 46.5% including Medicare Levy.

Invest and claim a tax deduction
If you are self-employed and make a personal contribution into super, you can claim a tax deduction for that full amount, up to a maximum of $25,000 per financial year (a transitional limit of $50,000 applies for those over 50 until 1 July 2012.)

Claim the Government Co-contribution
If you earn less than $61,920 and make an after tax contribution into your super fund, you may be eligible to claim a co-contribution from the Government of up to $1,000 per year - check with your adviser to see if you are eligible.

FUTURE ADVANTAGE: Pay no tax on withdrawals or pension payments from super once you retire
If you are over 60 and want to take a pension or lump sum from your super, you will generally pay no tax on the amount withdrawn. Investing into super can be tax advantageous now, but also later once you retire. The tax-free rule will apply to most pensions taken out before and after this date.

To discuss your super investments contact Baker Affleck Financial Solutions on (07) 5538 3088.