4 Apr 2024
Low hanging fruit: Superannuation
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
Many of you a are too young to remember but I was there advising on the 1st July 1992 when the Superannuation Guarantee (SG) began.
Today superannuation holds $3.5 trillion in assets and by 2048 it is forecast to grow to $13.6 trillion.
Click for charts.
Why does it continue to multiply? Because it is financially gorgeous.
Just imagine, you can invest in this thing called superannuation and only be charged a maximum tax rate of 15% on earning compared to the top 45% marginal rate for individuals.
And then when you begin drawing an income the tax rate drops again to 0% on everything- capital gains, distributions and withdrawals.
It does not get much better than this.
Apart from tax free capital gains on the primary residence in Australia there is no other legal way to reduce tax on earnings to 0% and that is the reason for so many restrictions on superannuation.
The math’s however is simple, we each get a $1.9m cap (meaning $3.8m for couples) and the Federal Government will not force you to take advantage of this low hanging fruit.
The best part is that you do not have to get on a ladder, you do not have to climb a tree, just reach up and take advantage of this opportunity.
Our business is based on referrals, so if you have family, friends or colleagues that want advice please ask them to contact us.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.
