Superannuation Contributions Simplified

The new Superannuation process was supposed to be a simplified version of a person’s taxable and tax-free benefits.

Under the new system, taxable benefits will include the income and concessional contributions of an individual, which are largely tax deductions of those with compulsory employer super guarantee contributions, as well as tax-deductible contributions of those who are self-employed.

Tax-free benefits, on the other hand, differ depending on the types of benefits received, paid and extended to. Those above 60 years old are no longer required to pay income tax on their pension benefits, while benefits paid out to a deceased member’s non-dependents may be taxed a total of 15 percent.

Those under 60 years old are required no tax only if their maximum income for the 2013 fiscal year falls at $175,000. In excess, individuals are required to pay 15 percent tax. Before the new system rolled out, those under 60 and was earning more than $37,000 to $80,000 paid their 15 percent tax.

The super also allows for small groups to receive tax-free benefits under their small business retirement exemption contributions.

The new rates, which rolled last July 1, is expected to encourage more members into the Superannuation system.

Once the pension fund contribution starts, the tax-free and taxable benefits are locked into this system permanently. Timing is crucial then for an individual to decide when he or she should make non-concessional contributions and super contributions.