Benefits of Putting Money into Super
- Tax free retirement pensions
- Risk protection for those in business
- Serious taxation and tax planning advantages (Case Study)
- CGT Rollover from sale of business
- Bonus contributions from the government – when contributing your own after-tax money into super you could be eligible to receive the government co-contribution
- Insurance – you may be able to get death and disability insurance cheaper through super compared to when purchased outside of super
Case Study in Tax Planning Advantages
John is 45 years old and runs his own business
Wage from business = $50,000p.a
9.5% Super Guarantee = $4,750
Business profit = $80,000
Tax Payable by Super Fund = $712.50
Tax Payable by Company = $24,000
If John contributes extra super up to his contribution cap limit of $30,000:
Business Profit = $54,750
Total Contributions to Fund = $30,000
Tax Payable by Super Fund = $4,500
Tax Payable by the Company = $16,425
Tax Saving overall of $3,787.50 for one year (assuming a growth factor of 5%, this would equate to approximately $73,845 tax saved by age 60)
Increased Superannuation of $25,250 for one year (assuming a growth factor of 5%, this would equate to approximately an extra $597,351 in superannuation by age 60)