Personal Super Contribution: Contributing Extra to Super

Retirement savings

As a very effective retirement structure, an SMSF (self-managed super fund) is a great way to have more control over your savings and protect your assets. By managing your retirement savings you are able to plan where you money is invested whether that be in property, shares, fixed interests, etc. As a general rule one super fund can have between 2 to 4 members and each member has the role of a trustee. As an active member and trustee of the fund you have are responsible for running your SMSF. This means that you should know all the relevant laws and regulations of the Australian Taxation Office (ATO) which regulates the super funds. You should make sure that everything is managed efficiently and is in accordance with the relevant laws. Making contributions while also keeping records of all the investments and legal operations as well as preparing your annual return on time are all vital parts of running your fund.

Your retirement savings depend on the contributions made to your super fund which can be in the form of assets of cash. Your personal super contribution is essential for accumulating the desired amount of assets. Being familiar with all the rules regarding the SMSF contributions is of utmost importance. The truth is that every trustee should understand the different methods for making contributions. Those contributions for which members clam a tax deduction are basically pre-tax contributions that are made by the employers but can also be made by the members themselves. You can also make after-tax personal super contribution as an effective method to increase your savings. While pre-tax otherwise known as concessional contributions are taxed at 15%, the after-tax or non-concessional ones are not taxed when you add them to your fund.

There are cases when the personal contributions of trustees are eligible for tax deduction. As a general rule employees are not able to get tax deductions for the contribution, however they may be eligible for co-contributions which are made by the government. For self-employed or unemployed trustees who are between 18 and 75 years old the rule is that they can get tax deductions but only when providing a valid notice of intent that has been acknowledged by the super fund. You should know that there are limits on contributions that depend on some specific conditions. Age has a vital role in this case and for those trustees under the age of 49 can can invest up to $30.000 into their super for one financial year. While higher contributions can be made by trustees who will retire within the next few years and are aged 50 or over.

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