Today I received my annual superanuation statement, which glorified itself on the front page saying how it returned double-digit growth for the 3rd year running…
I opened it up to find that the net earnings credited to my account were outweighed by deductions to the tune of about $180, including around $600 for tax. How is this possible? Does this mean that once I reach age 65 I will not pay tax on superannuation benefits? i.e. I am paying them now. Or am I paying tax on my super twice?
Thanks for
Age doesn’t negate effort – you can never be too young or too old.
You pay tax when you put it in called contributions tax 15% , your earnings within the fund are taxed at 15% and when you take it out you used to pay tax of 15% unless put into an approved rollover pension plan. I say used to as it has changed recently on taking out the super.
There was also a reasonable benefits limit that restricted how much money you could take out without being taxed. This is why I haven’t put any money of my own into super for the last 5 years. Also when you think you have a grasp on it a future governement will change the rules, tax , retirement age, ect. There was also an extra 15% contributions surcharge for higher income wage earners but this may have been removed.Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hello Spanky
This is an area that I’m currently looking at so am very interested as to how, if the fund earned double digits, you still lost $180.
OK you paid $600 being 15% tax on the earnings according to ducksters post. According to my calculations that must mean that you earned $4000 on your fund. What happened to the other $3580? Surely that’s not fees?
I confess major ignorance in this area and am just starting to look at the benefits of contributing to a super fund. The main incentive for me is that anything that I contribute will be taxed at 15%instead of at my top tax bracket and that any earings I take out will now be tax free after age 60. … non of this is relevant if the fund actually provides me with a net loss, as in your case, which is why I am so interested in your answer.
Thanks in advance [smiling]
ElkaFinally got time to actually call a rep from my super fund today! This is how I understand it at the moment:
The account itself is only a couple of years old, so the opening balance at the beginning of the last financial year was just over $2,000. My contributions for the last financial year were a little over $4,500. I’ve been taxed 15% on the contributions plus the account earnings for the year and a salary secrifice mishap one month that was supposed to be a personal contribution – I’ll talk to my employer about that.
I have then been charged insurance costs and member fees of a little more than $130, making my account look as though it has returned a loss, I’m assuming because the balance on the account is relatively low… If someone could clarify this, that would be great!
Basically, if I earn 15.5% again and make the same contributions, then I’ll gain a return on the total value of the account, yet only pay 15% tax on the new contributions plus earnings. Hopefully the earnings will then be enough to far outweigh the insurance and management costs.
Again – it would be great if an accountant or super professional could clarify any of this for us – I’m glad someone else on the site is interested in this topic too!
Cheers,
SpankyAge doesn’t negate effort – you can never be too young or too old.
Hi Guys
Whilst this post is not intended to offer financial advice which i am unable to do without a complete fact find and then preparation of a suitable Statement of Advice I will try and allay some Super fears.
Taxable contributions are contributions made for the purpose of making provision for superanuation benefits for another person (other than Spouse contributions). Employer contributions are the most common form of taxable contribution.
Tax is levied on superanuation funds based on the total of taxable earnings of the fund and the tax deductible contributions received by the Fund. Tax is levied at a rate of 15% for complying funds and 47% for non complying funds.
The exception is the pre-July 83 component on a rollover which is Tax Free.
Capital gains of the fund are included in investment income and taxed at 15%. From 21 Sept only 2/3rd of the capital gain is included on assets held in excess of 12 months, providing the superanuation fund with an effective tax rate of 10% on capital gains.
With new choice legislation switching of funds is a lot easier so if you are not happy with the performance or the fees being charged look around at alternative options.
Happy to answer any further queries you may have.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner.
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
I’d second all the above, great explanation Qlds007.
Also – I came across an interesting site for anyone wanting some basic info on super the other day. May suppliment or help answer any further questions -maxsuper.com.au
I’ve got no relation with them at all, just thought it was a refreshing explanation of some dry, often confusing topics
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