By definition, superannuation funds are special
accounts for employees which they can access once they retire. The Australian
government sanctions the creation of super funds, and has companies set up
contribution accounts for their employees per the Superannuation Guarantee
(administration) Act 1992. If you have signed up with a certain super fund,
you'll need to know what kinds of contributions are made into them. These are
split under concessional contributions (which are taxed at only 15 percent if
they do not exceed Act limits of $25,000 per fiscal year) and non-concessional
contributions (which are not tax-deductible but still follow the above cap).
The most common of them all is the employer
contributions, wherein the employer sets aside 9 percent of your ordinary time
earnings, but this does not apply to anyone with monthly wages under $450.
These are marked as concessional contributions.
Non-concessional super contributions take a lot of
forms. Personal contributions are after-tax additions put into the account, but these cannot be
accounted when applying for an income tax deduction. Spousal contributions are
made on an eligible spouse's behalf. You and your employer can also agree to
make a salary sacrifice wherein part of your gross pay will be put into the
account. The government may even make a co-contribution if you've made personal
contributions within your pay grade.
A super fund will take care of your financial needs
after your retirement. In this respect, you will need to set aside money way in
advance.
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