In This Issue
Dear Friends
Time to ‘rev’ up your super
From everyone at Marinis Financial Group, we wish you a very Happy Easter.
For many, Easter is the spiritual highlight of the year; for others it represents a more relaxed and gentle time than the end of year holiday season. For my part, I love the four days spent with our family and the time it provides for us to engage and reflect – reflection which I hope, turns into positive action. And I might well add that as I’m part of the ‘Greekster’ or Orthodox tradition, we celebrate on Sunday May 5, this year.
Time to ‘rev’ up your super
As we enter the last quarter of the 2023/24 financial year, it’s time to do the calculations to top up your contributions to super – bearing in mind that both you and your partner are entitled to contribute up to $27,500 as Concessional Contributions (CCs) this year (see also ‘And one more thing’ for some additional good news).
Here is a simple example of how ‘revving it up’ can work for you:
If you earn $100,000 a year, through the Super Guarantee (SG) your employer must contribute $11,000 to super on your behalf, leaving a gap of $16,500 which you can contribute – and get a tax deduction. Not only can you significantly reduce your taxable income, in simple terms you could save approximately $5,700 in personal tax.
And this is where the ‘magic’ begins; your investment ticks away inside super, paying just 15% tax on income and earnings, rather than approximately 34.5% if invested personally. The impact of compound interest over the medium to long term is, as Einstein is reputed to have called it, “the eighth wonder of the world…” and, as he is also quoted ‘’He who understands it, earns it… he who doesn’t… pays it.”
Of course, not everybody can afford to contribute $16,500 to their super, but even half of the amount in the above example will produce a substantial saving. The short and long-term benefits for you are significant when you combine your SG and this top up amount.
If your partner is a low-income earner (or if your children are working in casual jobs) they can still receive a significant benefit from the Federal Government. If you contribute $1,000 to your partner’s super or to that of your children, the Government will also kick-in an additional $500 for free, via the Government Co Contribution.
The following case study on the ATO website* is designed to encourage the worker to top up, but you can do it for them. It reads:
‘’In the current financial year, Angelo will earn $35,000. He pays $40 per fortnight from his take-home pay into his super account. This will total $1,040 for the financial year. He meets all other co-contribution eligibility requirements.
With this payment plan, Angelo will be eligible for the maximum co-contribution of $500. We will pay this amount into Angelo's super account.’’
Remember, the new financial year starts on 1 July (and is fast approaching!)… but you need to ensure your contribution is received and processed by your super fund before this date – so make sure to start ‘revving it up’ around the end of May.
And one more thing:
On 1 July 2024 super contributions levels will increase with indexation to the following amounts:
- The Concessional Cap will increase by $2,500 to $30,000 pa
- The Non-Concessional (NCC) cap will increase by $10,000 to $120,000 pa
- The NCC ‘Bring forward’ cap will increase by $30,000 to $360,000.
This is good news for all those in super accumulation phase, and even more so for those in the (tax free) account-based pension phase. The more you can put into the tax-friendly super environment, the more it will work for you.
And a reminder, SG is presently paid at the rate of 11% per annum and will increase (via two instalments) to 12% per annum in 2025.
*As accessed 7 March 2024 via www.ato.gov.au
Don’t forget: https://www.cyber.gov.au/protect-yourself
If you would like to see my latest public comments on the retirement savings debate, please click here.
As always, if I or any of my team can be of assistance, please don’t hesitate to contact us via email admin@marinisgroup.com.au or on (08) 8130 5130.
Yours sincerely
Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative