Along with a raft of legislative change, the Australian Securities and Investments Commission (ASIC) has also introduced new licensing requirements for accountants who work with and advise Self Managed Superannuation Fund (SMSF) Trustees. Only approx. 10% of accountants have complied with these changes to date.
As such if you, as many, consider your accountant would be your 1st port of call for Financial Advice, they will likely advise you, they are unable to provide the information you require & should consult a qualified Financial Adviser / Planner.
This is general advice only and you should seek expert financial advice from a qualified financial adviser before acting on any of the information covered in these topics.
One of the few Guaranteed Returns Available to Investors & the Power of Compounding Returns…the most Powerful Force in the Universe (as described by Albert Einstein)
Subject to eligibility, Australian’s can make pre-tax Concessional Contributions to super of up to $27,500 per annum (inclusive of the 10% Superannuation Guarantee you will receive if you are an employee). Funds contributed to super in this way are taxed at only 15% versus your marginal tax rate of up to 47%. As such by taking advantage of this opportunity you are getting one of the few guaranteed returns in life, being a tax saving.
If you are earning over $37,000, you will be on a marginal tax rate between 32.5% and 47%. As such if you contribute $27,500, you are getting a guaranteed tax saving of between 17.5% and 32%, up to $8,800 annually.
Given the new restrictions on what amounts can be accumulated in the tax friendly environment of superannuation, it is important that investors take advantage of this guaranteed tax benefit and allow the powerful benefits of compounding interest to unfold.
For example a superannuation investor taking advantage of their $27,500 limit (less the 15% contribution tax) at a compounding earning rate of 7.5%, less the 15% earnings tax applied to superannuation in the accumulation phase would build balances as follows:
- Over 10 years $350,723
- Over 20 years $1,087,357
- Over 30 years $2,643,177
- Over 40 years $5,929,169
You can see how powerful this can be if a family where both a husband and wife are maximising their contribution or in a Self Managed Superannuation Fund (SMSF) where you can have up to 6 family members.
“If you are not prepared to cannibalise your own business, somebody else will do it for you”. Steve Jobs