PUMP UP YOUR SUPER

Many people don’t get around to consistently building up a nest egg. But as they grow older, they realise they are missing out on superannuation’s valuable tax benefits and want to rev up their savings.

Salary sacrifice

The most tax-effective way to bolster your super is through salary sacrifice, because you are putting your pre-tax salary into your super fund. The money is taxed at only 15% instead of your marginal rate.

The maximum annual contribution is $27,500.

For most people, making extra concessional contributions is tax effective if they earn more than $37,000pa.

An advantage of salary sacrificing is that you may be able to slip into a lower tax bracket.

Take the example of Katie, who earns $90,000 before tax, excluding her employer’s super contribution. If she decides to redirect $10,000 of her pay into salary sacrificed super contributions, she will save $3450 in tax, with the extra money going into her fund.

Unused contributions

If you have less than $500,000 in your super, you can carry forward any unused concessional contributions.

You can use caps from up to five previous financial years, including when you were not a member of a super fund.

The amount you can put in depends on the amount you have contributed in previous years.

For example, Jon has only been putting $10,000 into his superannuation fund each year and he wants to boost