Super. It’s something we all should know more about, but often end up putting to the back of our minds to worry about later. In fact the sooner you find a few minutes to think about it, the sooner you can start making your super work for you, instead of the other way around.
Where to start?
The YourSuper tool is a great place to begin, allowing you to compare products and choose a super fund to meet your needs. You can rank MySuper products in order of fees and net returns, and you can link from there directly to the super fund’s website. It’s important to keep in mind that some super funds aren’t shown on the tool, so you may want to speak with a financial adviser for more information.
Taking advantage of co-contributions and tax offsets
If you earn less than $56,112 (for 2021/22) per financial year and make personal (after-tax) contributions to your super fund, the government may also make a co-contribution up to a maximum amount of $500 per financial year. The amount of the co-contribution you receive will depend on your income and how much you contribute, but it’s a great way of boosting your super. The best part is you don’t even have to apply to receive it, as it’s automatically added to your super fund.
Additionally, you may be able to claim a tax offset of up to $540 if you make an eligible contribution on behalf of your spouse (married or de facto) who is earning a low income or not working. For example, if you contribute $3,000 per financial year to your spouse’s super fund and they earn less than $37,000, you may receive a tax offset of $540.
Setting up a salary sacrifice
If you’re keen on boosting your super account even more, consider setting up a salary sacrificing agreement with your employer. This will mean your employer pays some of your salary or wages into your super fund instead of to you. These contributions are only taxed at a maximum of 15%, which for most people, is generally lower than your marginal tax rate.
For example, if you earn $80,000 per year, you may choose to receive $75,000 in income and salary sacrifice $5,000 into your super. Generally, making extra salary sacrifice contributions is tax effective if you earn more than $37,000 per year.
Making ethical decisions
Especially for younger Australians, an important consideration when choosing the right super product might be assessing the ethical nature of investments. The idea of your super investments helping to make the world a better place is hugely appealing, knowing that your money has the ability to support companies and industries that are making a positive impact on communities and on our environment.
It’s important to remember this can come at the cost of reduced returns or higher fees, so make sure to view the product disclosure statement (PDS) of each individual fund for more information.
As always we're here to help you on your way to achieving your financial goals and our financial advisers can help you navigate these investment decisions, or you can also visit moneysmart.gov.au for some super tips.