Saving for you retirement is essential for everyone, here are some tips to help you plan for your retirement and start saving. You can sacrifice a portion of your pre-tax salary to your super fund. This attracts a tax of only 15 percent, which is about half of the average marginal tax rate. For salary sacrificing, individuals aged 50 and below can contribute up to $50,000 while those above 50 have a yearly limit of $100,000 until July 2012.
Before forfeiting a portion of your salary to your super fund, you should firstly speak to your employer so you can make arrangements like contributing a one-off payment. You can beat taxes by continually contributing a portion of your salary to your fund, by using a transition to retirement income you can increase your retirement benefit and get a flow of income that is tax-free.
Self-employed individuals can also use super contributions to increase their retirement money and reduce their liability of company taxes. Just like corporate salary sacrifices, you can contribute $50,000 annually if you are aged 50 and below and $100,000 if you are 50 and above to claim a full tax deduction.
You can also save through co-contributions which is a program that is funded by the Government to help individuals with lower income to save for their retirement. If you earn less than $60,342 a year and make personal contributions to your super fund, the Government will return a certain portion of your contribution.
If you are earning less than $30,342, the Government will add $1.50 for every dollar that you contribute up to $1,500 yearly. The Australian Tax Office will automatically deposit your co-contribution to your super account once you qualify.
You may also contribute on behalf of your spouse making for a tax-efficient way for couples to save for their retirement. If you are working and your eligible spouse is not working or earning less than $13,800 a year, you can contribute for them and get tax bonuses.
Finally, another way to save for your retirement is by way of personal post-tax contributions that are taken from your after-tax salary. Therefore, you will pay need to pay tax on this contribution. Your investment earnings are taxed at the concessional super rate of 15% while you can access your super benefit tax for free upon your retirement.
Personal post-tax contributions, allow individuals under the age of 65 to contribute up to $150,000 a year or $450,000 for three years.
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