Super is a really attractive investment for your future and a great means of accumulating wealth in a favourable tax environment.
Working Australians receive significant tax benefits and government incentives for contributing to super. The tax you pay on money entering your super account and on any earnings is generally capped at 15%. When compared to the tax you could pay on income earned outside of super, your salary for example could be up to 46.5% (including the Medicare Levy).
These rates apply to individuals who:
- are residents of Australia for tax purposes for the whole financial year, and
- did not leave full-time education for the first time during the financial year.
2007-08 Tax Rates
|
Taxable income |
Tax on this income |
|
$0 - $6,000 |
Nil |
|
$6,001 - $30,000 |
15c for each $1 over $6000 |
|
$30,001 - $75,000 |
$3,600 plus 30c for each $1 over $30,000 |
|
$75,001 - $150,000 |
$17,100 plus 40c for each $1 over $75,000 |
|
$150,001 + |
$47,100 plus 45c for each $1 over $150,000 |
*In addition to these tax rates, the Medicare Levy (up to 1.5%) and Medicare Levy Surcharge (1%) may apply. Tax rates current as at July 2007.
This table shows how much tax you pay on your income. Contributing to your super means it can grow faster and you can pay less tax.
Your Tax file number and what it means for your super
If you don’t supply your super fund with your tax file number (TFN) the following may apply to you:
- your fund will have to pay extra income tax on certain contributions
- your fund may not be able to accept certain other contributions, and
- you may miss out on super co-contributions.
Your fund will have to pay extra income tax
It is not compulsory to give your TFN to your fund, however if you don’t, your fund will be liable to pay extra income tax on certain contributions made to your account. Your fund may take this out of your account. The contributions that are most likely to be taxed in this way are the contributions your employer makes for you, including salary sacrifice contributions.
If you have a super account which was opened prior to 1 July 2007, and you have not provided your fund with your TFN, contributions made after this date will be taxed an extra 31.5% once those contributions exceed $1,000 in an income year. This includes the first $1,000. If you open a super account after 1 July 2007, and do not provide your fund with your TFN all contributions you make to that account will be taxed an extra 31.5%.
Your fund will work out if it has to pay this extra tax at the end of each year. So you have from now until 30 June 2008 to give your TFN to your fund (if you have not already done so).
You may not be able to make certain other contributions
From 1 July 2007, your super fund will only be able to accept certain other contributions if you have given them your TFN. This may affect your eligibility to receive a super co-contribution.
The contributions your fund will have to reject include any contributions:
- you make for yourself, and
- your spouse makes to your super account for you.
Quoting your TFN
From 1 July 2007, when you give your TFN to your employer on a Tax file number declaration (NAT 3092), they must pass your TFN on to your super fund. If you are not sure whether your fund has your TFN, you should check with your super fund or contact Wealth Smart on 1800 765 100.
For more information on tax visit www.ato.gov.au |