Under the Superannuation Guarantee Laws, it is binding on your employer that he pays 9.5% of your salary/wages to your Super fund’s member account. It is a legal binding and pertains to any employee who is above the age of 18 and earns in excess of $450 monthly.
Concessional SG contributions (before and after tax)
The above is termed as Concessional SG contributions and your employer can avail tax benefits out of these (deductions claimable as business expense). As an employee, it is entirely your choice which Super fund you want your employer to put money into each month, fortnight, or week.
Salary sacrifice
Unless your employer disagrees to the arrangement, you can instruct him to make a salary sacrifice on your behalf. Hereby, you ask him to put a pre-stipulated amount out of your before-tax salary to your Super fund. All the earnings you make on your Super fund are only taxable at 45% instead of the exorbitant marginal tax rate. If you buy properties using your SMSF, you are eligible to pay a Capital Gains Tax (CGT) of only 10%.
Choose your investment option carefully
You can choose to park your Super money anywhere you like. It is another matter that the range of investment vehicles is a lot bigger when it comes to self-managed Super funds. If you do not make a choice regarding your investment options, the default option — called the balanced option of investment — is exercised for you.
Super system encourages retirement savings
The Super system was introduced to boost the retirement nest egg, so it is in the fitness of things that you are not allowed to take money out of your Super until you reach the retirement age or the preservation age. Of course, you can do so if you pass the pre-specified condition of release, too.
Contribution caps
Another important thing about the Super system: It is important not to surpass your contribution caps. Doing so can make you liable to penalties deemed fit by the premier governing bodies.
