What you can do if you want to give your super a boost
There are many ways to save up for your retirement, and topping up your super may be one of them.
There are many ways to top up your super, including:
- Salary sacrifice (before-tax) contributions – you can arrange with your employer to sacrifice some of your salary directly into your super instead of taking it all as pay.
- Personal (after-tax) contributions – you can make contributions from your take-home pay (or after-tax income) to your super account, either through BPAY or bank transfers.
- Government co-contributions – if you’re a low to middle income earner and make after-tax contributions to your super, the government may also match your contribution to your super up to a maximum of $500.
- Spouse contributions – if your spouse is a low-income earner or isn’t working, you may be eligible for a tax offset of up to $540 for 2019-20 for any after-tax contributions made to your spouse’s super account.
- Downsizer contributions – if you’re 65 years old or older, you can put up to $300,000 into your super using the money from the sale of your main residence.
Growing your super now may result in more money for your retirement, while potentially paying less tax.
Depending on your circumstances, putting money into your super now can be a tax-effective way to save for your retirement.
- It may reduce your taxable income - By redirecting some of your salary to your super, you could lower your taxable income. This could result in you paying less tax.
- You may pay less on contributions - your super contributions are taxed at 15% (if you earn less than $250,000 including super contributions) or 30% (if you earn more than $250,000 including super contributions). This may generally be lower than the tax rate you pay on your take-home pay, which can be as high as 47%.
You should check with your financial adviser on whether contributing into super will help you pay less tax.
What you need to consider
How much can I contribute? Is there a limit?
You should look at your personal financial circumstances to determine if you can contribute and if you can afford to do this as a once-off or regularly. Your financial adviser can help you decide if contributing into super is right for you. You can also call us on 133 731 for general information on your options.
It is important to note that caps apply to what you can contribute in a year.
A concessional super contributions cap applies to salary sacrificing.
This effectively limits how much you can contribute to your super fund to receive the 15% or 30% tax rate. Any amounts you contribute over $25,000 per year will be taxed at your marginal tax rate, plus an excess concessional contributions charge.
Other contributions may also count toward the $25,000 limit. You can check with your financial adviser, but generally, this includes:
- Contributions by your employer, including compulsory contributions under the Superannuation Guarantee
- Contributions from any other jobs you may have held in the same financial year
- Contributions you make from your take-home pay which you choose to claim as a tax deduction
- Notional taxed contributions if you’re a member of a defined benefit fund.
For personal contributions (non-tax deductible), spouse contributions or government co-contributions, depending on the total value of your super and income, you can generally contribute up to $100,000 per year. Your financial adviser will be able to help you determine how much you can contribute in a year based on your situation.
If you’re under 65, and your balance is less than $1.4 million (in respect of the 2020-21 tax year), you may also be able to take advantage of the bring-forward rules. These rules allow you to contribute up to $300,000 over 3 years, however, you won’t be able to make further after-tax contributions for the next 3 years.
Note that if you go over your contribution limit, penalties will apply. However, downsizer contributions are not included in either of the limits mentioned above.
Other things to think about
- The value of your investment in super can go up and down. Before making extra contributions, make sure you understand and are comfortable with any potential risks.
- The government sets rules about when you can access your super. Generally, you can only access it when you’ve reached your preservation age (which will be between the ages of 55 and 60 depending on when you were born) and when you retire. If you want to access your super earlier, you can read more about it here.
- Check whether your investment options are right for you. Retirement Savings Account (RSA) is a secure, conservative super product. Before deciding to make contributions, you may want to speak to your financial adviser to determine if this right for you.
If your super guarantee contributions are currently paid into another super fund and you would like to have it paid to your AMP Life super account instead, you can download the form below and provide it to your employer. You’ll need your account number or product name to download the right form.
If you want to make a one-off payment to your super, complete the form below and send it back to us
Any advice and information on this website is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (‘AMP Life’), which is part of the Resolution Life group. The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on the advice, you should consider the appropriateness of the advice, having regard to those matters.
Products in the AMP Eligible Rollover Fund, National Mutual Retirement Fund, and NM Pro Super Fund are issued by Equity Trustees Superannuation Limited ABN 50 055 641 757. Insurance and Investment products are issued by AMP Life.
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