10th Nov 2009 by Tobias John Sterling
Unsurprisingly (given that it is in the government's interest to ensure that people have enough money in retirement and so don't have to rely on the Age Pension), saving money for retirement in superannuation is highly tax-effective. When your employer contributes the mandatory 9% of your wages or salary to your super, this money is taxed at only 15% rather than at your normal marginal income tax rate (which can be up to 47%). If you want to salary sacrifice extra money into super, again you pay only a contribution tax of 15% rather than your normal marginal income tax rate. Also, salary sacrificing reduces your taxable income, which can reduce the amount of tax you pay on the remaining money. The 15% tax also comes in at two other points: 1) It is charged on investment earnings made by your super fund(s), and it may be charged on some or all of your superannuation if/when you make a lump sum withdrawal (you may need to research this further to determine exactly how you will be affected).
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