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Is my Superannuation being taxed?


Many of you may have noticed on your recent superannuation statement that an amount has been deducted for tax. Superannuation tax can be a little confusing, many people in fact believe that they pay no tax in their super.  Unfortunately this isn’t true.
Each year your employer pays 9.5% of your salary into your nominated super fund in order to meet their Superannuation Guarantee obligations.  For every dollar that your employer pays into your fund, 15% of it is taken as contributions tax.  It’s worse if you earn over $300k per year when the tax paid jumps up to 30%.
If you’re a savvy investor, you’ll have your super invested in funds that earn income throughout the year.  Be it interest, rent, dividends and so forth.  These earnings don’t escape tax. They are in fact also taxed at 15%.
Of course these tax rates are well below most people’s personal tax rates.  So having your money in super does mean you’re paying a lower rate.  The trade off for this is that you can’t access your money until you reach preservation age which for most of us is age 60.
So what does all this mean? The fact is, no one likes paying tax, and tax on super is difficult to minimise as you can’t apply any personal tax deductions to your super fund.
Is there anything you can do?  There are two things you can do to help.  Firstly you can invest in good quality superannuation funds that enjoy strong growth rates.  This won’t reduce the tax paid but you won’t mind as much if your balance is growing strongly. 
The second thing you can do is be mindful that most high quality superannuation funds allocate part of your money to Australian based, high quality shares.  These shares for the most part, enjoy tax credits on the income they earn.  It’s a little complicated, but the income earned (known as dividends) will often have an associated tax credit that can be used by your super fund to offset tax paid on the earnings.
Understanding tax is a full time job and best left to the experts.   However, you should at least be aware of what you’re paying and by taking a few prudent steps, do your best to minimise it.
An event plug now...if enjoying some pizza and beverages while being at an information session about "you and your super" sounds reasonable to you,  I am holding an informal session later this month - find out more about the Pizza Business After Hours here. 
Andrew O’Brien and Hindsight Group Pty Ltd t/as Hindsight Wealth Pty Ltd (ABN 88 168 442 528) are Authorised Representatives of Synchron AFS Licence No 243313.  Andrew O'Brien. FINANCIAL ADVISER. P 07 3852 3025  M 0403 156 625  E andrew@hindsightwealth.com A Suite 4 / 30 Florence Street, Newstead QLD 4006.  View our Privacy Policy here. 

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