Why invest in superannuation? Specifically designed and endorsed by the Federal Government as the preferred way to save for your retirement and has added tax benefits that make it particularly attractive.
Superannuation can be a tax effective way of building wealth for your retirement. The tax rates imposed on superannuation funds include:
- contributions tax at 15%. This increases to 30% for those earning $300,000 or above
- investment income tax at a maximum of 15%capital gains tax at a maximum of 15%. If the asset has been owned by the superannuation fund for more than 12 months, the maximum rate of capital gains tax is 10%
- where an income stream is commenced, the tax rate on income and capital gains in the pension account reduce to zero.
- Pension payments are also tax free for those aged over 60. For those aged between 55 and 60, pension payments (less any tax free amount) will be taxed at your personal marginal tax rate but receive a 15% tax offset.
These superannuation tax rates are in contrast to your personal marginal tax rate, which could be considerably higher.
When can I access my superannuation? Superannuation benefits are restricted in that they generally cannot be accessed until the owner reaches their preservation age and has retired or, the owner reaches age 65.