Superannuation - every working Australian has an account but not all understand it. The legislation of compulsory super contributions was first introduced in 1992 by then Treasurer, Paul Keating. It aimed to solve the issue of retirement income for all Australians. Twenty eight years on, superannuation assets have grown to a massive $2.7 trillion, an incredible 1.5 times Australia’s gross domestic product.
With the government’s recent scheme of early access to superannuation, activity within super accounts have been at all-time high, with 2.6 million Australians withdrawing funds.
So here are 5 reasons why you should check your superannuation statement.
According to a recent audit by the Australian Tax Department (ATO), a worrying 11 to 20 percent of employers are not making the right super contributions for their employees. This has been exasperated by the recent $1,500 per fortnight Jobkeeper payment, introduced by the Australian Government as part of its economic response to COVID-19.
According to the ATO’s superannuation guarantee (SG) guidance, only ordinary wages are subject to the 9.50 per cent employer super, not the $1,500 Jobkeeper amount. Take Johnny for example, who’s ordinary wages were $850 per fortnight, but received an additional amount of $650 to make up the $1,500 per fortnight Jobkeeper payment. His employer is obligated to pay SG only on the $850 and not the top up.
Mary, on the other hand, earns $2,000 per fortnight in her ordinary job. Her employer receives the $1,500 Jobkeeper to supplement her wages. Mary is entitled to 9.50 per cent SG on her ordinary wages of $2,000.
The ATO has a useful tool on its website www.ato.gov.au to estimate your super entitlements.
Have you recently tied the knot and changed your name? Perhaps you have moved houses and neglected to inform your superfund provider, or changed your email address and mobile number. If your personal details aren’t up to date and you change superfunds, your contributions could end up lost.
At last count, there was $20.8 billion in lost and unclaimed super across Australia, as reported by the ATO. Check your personal details are up to date and track your super by using the ATO online services through www.my.gov.au.
Superannuation is the most tax effective way to save for retirement, at a tax rate of 15 per cent. When checking your superfund statement, you discover that you are being taxed more than 15 per cent on contributions, chances are your superfund provider does not have hold a record of your Tax File Number (TFN). You can update your TFN through the superfund online member portal or via their call centre.
From 1 July 2018 you have the option of topping up your superannuation and claim a tax deduction. By utilizing the unused concessional carry forward provision, for superannuation balances less than $500,000, you could pay a lump sum of more than the usual cap of $25,000 into your superannuation. The key is to complete and lodge an ’intent to claim’ form with your superfund provider. If this is missed, you forego claiming a tax deduction on the contributions.
According to the Australian Competition and Consumer Commission (ACCC), superannuation scams are one of the many ways in which Aussies are losing their hard-earned retirement savings to criminals. The ACCC Scamwatch, revealed that over 2,000 coronavirus-related scams had been reported so far with losses of over $700,000. In addition, the Australian Federal Police (AFP) investigated claims of superannuation theft from 150 potential victims, having accounts with providers such as HESTA, Hostplus, and Australian Super.
To protect your superfund from online theft, diligently scan through the transactions of your annual super statement to ensure that no unintended withdrawals had been made throughout the last financial year. Furthermore, if you are one of the many that withdrew funds through the early access to super scheme, check that the right amount had been withdrawn with no double ups.
The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.