How to boost your super, save tax and retire better.

Transcription

1 How to boost your super, save tax and retire better. Do some simple things today and you could have more tomorrow. Additional Contributions November 2017 Ratings are just one factor to consider when deciding on a product. For more information on our ratings visit vicsuper.com.au/ratings VicSuper Extra Contributions 1

2 A gift to future you It doesn t matter whether you re 25 or 55, being able to afford a great retirement starts today. We ll show you how easy it is to leave a big gift for future you, just by making small additions to your super now. We have step-by-step guides and online tools to help you, making it super simple. At VicSuper, we want you to retire well! Get in touch Online tools vicsuper.com.au Give us a call Drop in for a chat VicSuper Extra Contributions

3 Plan your way to a better retirement follow these easy steps Decide how you want to retire and set a budget for it Page 7 Work out how much super you may need Page 7 Boost your super to help you retire with more Page 10 Five ways to boost your super Before-tax After-tax Other Generally one of the lowest taxed investments you can make Contribute up to $100K tax free every year 1 Salary sacrifice contributions Generally taxed at 15% See page 12 2 Personal deductible contributions Generally taxed at 15% Claimed in your tax return See page 14 3 Personal after-tax contributions Top up your super from your take home pay See page 15 4 Spouse contributions Add to and boost your spouse's super See page 16 5 Government co-contributions Earn $51,813 or less? Get 50c from the government for every $1 you put in, up to $500 a year See page 18 VicSuper Extra Contributions 1

4 Given much thought to your super lately? If super isn t exactly top of mind for you, you re part of a pretty big club. In fact, many working Australians have little or no idea how much super they ve got, let alone how much money they ll need to retire on, or even if they can afford to retire. But it s not a club you really want to be in especially when you consider that the super our employers set aside for us generally won t be enough to let us retire in comfort. Imagine if you could retire with more So imagine for a minute that you could make a big difference to your super with just a few small steps. Imagine if someone could actually help to make it easier to save more income for your retirement, and imagine if you could boost your chances of retiring sooner. Now have we got you thinking about your super? Build a bigger super balance? Yes, you can! The good news is, you can make a difference to your super and we re here to help you do it. In this booklet, we ll take you through the different ways to add to your super today, to help you achieve the income you need for your future. Why? Because even the little steps you take right now, could make a big difference to what might turn out to be your most significant career change yet retirement. We're here to help you VicSuper is here with you, every step of the way, demystifying super, and helping to make it easier for you to save for your future. Jump online Check out our digital tools including Beeline our online guidance and advice service for members (there s no extra charge). Beeline helps to simplify your decisions, and gives you a simple, personalised coaching experience to help you achieve the income you need for a better retirement. Check out your own personalised dashboard and see how it can work for you. vicsuper.com.au/beeline Talk to someone Take advantage of the personal financial advice on your VicSuper account that s available to you as a member usually at no extra charge and we ll help you get super active! We're here to help. Simply give our team a call on

5 What s so super about super? It s your gift to future you Super can be your ticket to a better life when you ve decided to wind down from permanent work and do the things you want, rather than have to do a life of choice. It s money that s set aside while you re working, so that it s there to spend once you pursue a different kind of lifestyle when you re older. It s that simple. Super is one of the most tax effective investments you can make Compare the difference for every $1000 earned: And you can pay less tax Not only is super a purpose-built way to save for your future, it s also one of the most tax-effective investments around. Money in your super investment is generally taxed at a lower rate than most other kinds of investments. Which could mean more money for you at the end of the day. Superannuation Vs Other investments Your marginal tax rate + medicare levy 0.0% ($0 $18,200) Paid in tax -$0 UPS AND DOWNS! It s also important to keep in mind that super is an investment and all investments have a level of risk. The value of your investment in VicSuper may rise or fall depending on a number of factors. While we have generally seen positive returns for members lately, you may also experience negative returns from time to time that result in dips or fluctuations in your earnings. 15% * TAX RATE $150 * TAX 21% ($18,201 $37,000) 34.5% ($37,001 $87,000) 39% ($87,001 $180,000) 47% ($180,001 +) * Please note, if your adjusted income exceeds $250,000 per year, your contributions are generally taxed at an effective rate of 30%. -$210 -$345 -$390 -$470 VicSuper Extra Contributions 3

6 Why it's so important to consider adding more now You d be forgiven for thinking your employer is taking care of super for you and that you don t need to do anything else. After all, for most of us, our employers are currently required by law to contribute a mandatory 9.5% of our salary into a super fund. It s called the Superannuation Guarantee. But for most of us, those regular contributions may not be enough to retire comfortably. Exactly what is a comfortable retirement? The Association of Superannuation Funds of Australia (ASFA) has done the maths on what a comfortable retirement looks like and what it costs, compared to just a modest retirement here s how they stack up. Modest lifestyle Comfortable lifestyle How much you ll need per year Single $24,270 Couple $34,911 Single $43,695 Couple $60,063 Minimal domestic travel Minimal alcohol Overseas travel Dinners out Home improvements Extra social activities ASFA Retirement Standard figures correct as at September 2017.

7 Do you think the Age Pension will have you covered? Think again This table shows the current maximum level of Age Pension (depending on your circumstances) compared to the ASFA Retirement Standard figures. Keep in mind that this is means tested, so you may not qualify for the full amount. The problem is clear the Age Pension, even at its full amount, may not be enough to cover even a modest lifestyle in retirement, and the shortfall is even greater for those who were hoping for a comfortable lifestyle. ASFA Standard Figures (June Quarter) Centrelink Age Pension (September 2017) Modest lifestyle Single $24,270 $23, Couple $34,911 $35, ($17, each) Comfortable lifestyle Single $43,695 $23, Couple $60,063 $35, ($17, each) DID YOU KNOW? The Age Pension, even at the full amount, may not be enough to cover a modest lifestyle. Difference -$1, $ $20, $25, Centrelink Age Pension rates and ASFA Retirement Standard figures current at September As you re probably already aware, Australia s population is ageing and this has direct implications for your retirement. That s because an ageing population means the proportion of our society reaching retirement age is growing, while at the same time, the proportion of working Australians is shrinking. The upshot? More people are likely to rely on the government s Age Pension to live, but fewer people may be working and contributing the very taxes that fund it. In the years to come, the Age Pension may well be significantly lower, and considerably more difficult to obtain. So don t bank on a safety net that may not be there it s important that you make some decisions now and take control of your own future. By adding more to your super now, you could build a bigger balance for your retirement, giving you more to spend in your later years. And there are loads of different ways to add to your super, so there s bound to be one that suits your circumstances. Plus, we re here with you every step of the way, making it easy for you to save more today, and look forward to a better retirement tomorrow. How could you boost your chances of achieving the retirement you want? Easy, activate your super So let's get started > VicSuper Extra Contributions 5

8 Plan your way to a better retirement Can I afford to retire? Working out how much you ll need to get you through your retirement and whether you re setting aside enough super to help get you there depends on a whole range of factors that are specific to you, including: the kinds of things you want to do when you retire (and how much they ll cost) whether you re single or part of a couple exactly when you re planning to retire and even your likely life expectancy. When can I access my super? There are restrictions on how and when you can use your super so you re not as reliant on the Age Pension when you retire. Your super is preserved in the super system until you have reached your preservation age and permanently retire from the workforce (or until you ve met another condition of release * ). Your preservation age differs depending on when you were born, as shown below. WHAT IF MY SUPER S FALLING SHORT? 51% of Australians are not saving enough in super to live comfortably in retirement *. VicSuper can help you join the 49% who do. Turn to page 10 to find some different ways to give your super a boost today. *Source: 2016 Mercer Retirement Readiness Index Date of birth Preservation age Before 1 July July June July June July June July June July 1964 or later 60 *Other conditions of release are outlined in more detail in the VicSuper Member Guide, which can be downloaded at vicsuper.com.au/memberguide. Or, call our Member Centre on for a copy. 6 VicSuper Extra Contributions

9 It s all in the planning It s essential to plan to help make sure your super will be enough, and we ve got just the tools to get you started. Step 1 Set a budget for your retirement Jump onto our website and try our Beeline service Step 2 Work out how much super you might need to get you there Step 3 Get super active and give your super the boost it may need If you re a VicSuper member, jump onto our website and try Beeline our online guidance service for members. With easy-to-follow, step-by-step instructions, Beeline can help you to set a budget for your retirement in minutes. Go to vicsuper.com.au/beeline, check out your own personalised dashboard and follow the simple prompts to complete each step. Beeline will do the rest helping you work out the likely cost of your ideal retirement. Once you ve got a sense of what your retirement is likely to cost from year to year, just use Beeline to help you work out if your current rate of super saving might be enough to achieve that retirement goal. You can also use Beeline to test out different ways to make your super grow, and see the difference that additional savings can make over time to your final balance when you retire. Like most Australians, you and your super might have a bit of work to do if you re going to be able to afford the type of retirement you ve got in mind. The good news is, you can take action, and the sooner you do, the bigger the difference it could make to your retirement. Get in touch Online tools vicsuper.com.au Give us a call Drop in for a chat VicSuper Extra Contributions 7

10 Different types of contributions There are a number of ways to make or receive contributions into your super. Before-tax (or concessional ) contributions come from your pay before income tax has been calculated. After-tax (or non-concessional ) contributions are made from your take-home pay that is, the money that s left after your income tax has been deducted. Government schemes exist for eligible lower income earners. The government can also provide assistance to help top up your super savings. Each type of contribution can differ in terms of when and how they re made, how they are taxed, and even who they might be intended for (for example in the case of spouse contributions, you can make them for, or receive them from, your spouse). Superannuation guarantee contributions (SG) Most employees receive these compulsory contributions that your employer adds to your super account on your behalf as a percentage of your salary. They are usually taxed at 15% on the way into your super and count towards the before-tax (or concessional) contributions cap. Your SG contributions are one of the key ways the government helps working Australians set aside money for their retirement. However, it s unlikely to be enough on their own for many of us to achieve a comfortable retirement lifestyle. Superannuation guarantee payments are compulsory for working Australians who are: 18 years old or over, and are paid $450 or more (before-tax) in a calendar month under 18 years old and being paid $450 or more (before-tax) in a calendar month and who work more than 30 hours in a week.

11 The cap on contributions There are annual limits on super contributions, these are called contribution caps. If you contribute enough to go over the caps in a given year, you may be taxed more on your contributions than if you stay within the caps. Concessional (before-tax contributions) There is a cap on how much you can add into your super and still enjoy the concessional 15% tax rate* it s called the concessional contributions cap. It s important to be aware that any superannuation guarantee contributions your employer makes on your behalf and any salary sacrifice or personal deductible contributions you may make also count towards this cap, as they re all classed as concessional contributions. The concessional contributions cap applies across all super accounts you may have, not just VicSuper. How much is the cap? In the 2017/18 financial year, you can add up to $25,000 in before-tax contributions to your super account all at the low tax rate of 15% *. *Please note, if your adjusted income exceeds $250,000 per year, your contributions are generally taxed at an effective rate of 30%. If you go over the cap If you contribute more in before-tax contributions than the cap, the excess contribution amount will be taxed at your marginal rate, plus an interest charge and tax offsets apply. But it s a scenario that s best avoided. KNOW YOUR LIMITS Before you start making additional contributions, it's vital to review all of the super contributions you make to ensure you stay within the caps and aren't charged additional interest and tax. Non-concessional (after-tax contributions) In the 2017/18 financial year, you can contribute up to $100,000 in personal, after-tax contributions into your super account tax-free as long as your total super balance was less than $1.6 million on 30 June It s called the non-concessional contributions cap. The non-concessional contributions cap applies across all super accounts you may have, not just VicSuper. What else counts towards the cap? Also included in this cap are eligible spouse contributions that your spouse has made into your super for you, and any excess before-tax contributions you have made that you haven t elected to be refunded. If you go over the cap If you contribute more in after-tax contributions you have a couple of options. You could choose to leave the excess in your super; this will be taxed at the top marginal rate plus the Medicare Levy (47%). Alternatively, you may elect for a refund on your excess. With this option, any relevant earnings will be taxed at your marginal rate and an offset will apply. Bring forward entitlements for the under 65s If you re under age 65 and your total super balance is under the transfer balance cap ($1.6 million for 2017/18) at 30 June, you can bring forward up to two years of future entitlements (if your balance is between $1.4 million and $1.6 million, there is reduced eligibility for this). This essentially amounts to an after-tax contributions cap of $300,000 over a three year period. Transitional rules apply if you triggered the bring-forward rule in 2015/16 and/or 2016/17 financial years. You can find out more about contribution caps in our Member Guide, which can be downloaded at vicsuper.com.au/memberguide Alternatively, you can call our Member Centre on VicSuper Extra Contributions 9

12 Five ways to grow your super balance There are plenty of ways to add to your super, over and above the superannuation guarantee payments that your employer makes on your behalf. And there are several reasons to do it: it s simple (and we can help if you need it) it s a way of adding to your savings at the lower tax rates that apply to super it could increase the income you ll have when you retire it may even give you the option of retiring sooner. Before-tax (or concessional contributions) Type of contribution 1 Salary sacrifice contributions You can make these contributions out of your regular pay, before income tax has been deducted. 2 Personal deductible contributions Personal contributions that can be made any time in the financial year. This is an alternative to salary sacrifice for some. How they're taxed Some key features Typically suited to Taxed at 15% on the way in to your super. Some powerful tax-saving features. You ll need to check to see if your employer can accommodate these contributions. Important to do your homework before choosing this type of contribution and make sure it s a good option for you. Does not qualify you for the government co-contribution. Those wanting to save more money for their retirement, and at the same time reduce the income tax they pay. Those who earn at least $18,201 a year with a marginal tax rate of 19% or more. Taxed at 15% but you have to notify us of your intention to claim these in your tax return. Can help you retire with more money (or retire sooner). Some powerful tax-saving features. Important to do your homework before choosing this type of contribution and make sure it s a good option for you. Does not qualify you for the government co-contribution. Anyone under 74 years old (you ll have to meet a work test if 65-74). More suited to those who are selfemployed or employees who have difficulty accessing salary sacrifice at work. Those who earn at least $18,201 a year with a marginal tax rate of 19% or more. Show me how See page 12 See page 14 Contributions cap $25,000 before-tax (concessional) contribution cap. $25,000 before-tax (concessional) contribution cap, if claimed. Otherwise, they are counted in the after-tax (non-concessional) contribution cap of $100, VicSuper Extra Contributions

13 After-tax (or non-concessional contributions) 3 Personal after-tax contributions You can make these contributions out of your regular pay, after income tax has been deducted or as a one-off lump sum. 4 Spouse contributions Contributions that you can make into your spouse s super account, or that your spouse can make into your super account. Other 5 Government co-contribution A bonus contribution made by the government for those who qualify, designed to help people on lower incomes boost their super savings. Generally not taxed. Generally not taxed. Not taxed. Can help you retire with more (or retire sooner). How much and how often you contribute is up to you. You need to make one or more of these to qualify for the government s co-contribution (if you re eligible to receive it). A way for you and your spouse to help each other retire with more money (or retire sooner). Can help spouses to balance out their super benefits, and possibly reduce the tax the higher income spouse pays. Essentially a bonus from the government, designed to help those on lower incomes boost their super savings. Eligibility requirements apply, and you must make an after-tax personal contribution to your super to qualify. Virtually anyone wanting to save more for their retirement. Those who are eligible and want to get the government co-contribution. Spouses looking to boost their own or their spouse s retirement savings. Spouses seeking to reduce the tax they re paying. Those earning under $51,813 per year, and who can make a personal after-tax contribution of their own. See page 15 See page 16 See page 18 $100,000 after-tax (nonconcessional) contribution cap. $100,000 after-tax (nonconcessional) contribution cap of the receiving spouse. N/A VicSuper Extra Contributions 11

14 1 Salary Sacrifice a smart before-tax contribution What is salary sacrifice? Salary sacrificing your super contributions involves paying some of your before-tax salary (that s your income before any income tax has been calculated or deducted) into your super account. In essence, you re putting some of your income away now, so that you could pay yourself more in retirement. A mutual arrangement with your employer You ll need to check with your employer first to ensure they can accommodate salary sacrifice contributions because they are arranged through your employer s payroll team. If they can, you can salary sacrifice from your future regular salary, bonuses, or allowances. Pay less tax. More for you One of the major benefits of salary sacrifice contributions is the ability to lower the amount of tax you pay, and mean more income for you in retirement. 1. Pay less tax on your overall income Salary sacrifice contributions are taken out of your salary before income tax is calculated, so they have the effect of lowering your taxable income. The contribution comes out first, and then income tax is calculated based on what s left of your salary. The upshot? You could pay less tax. 2. Pay less tax on the money you add to your super Salary sacrifice contributions are generally taxed at 15%. That s much lower than up to 47% (including the Medicare levy), which is the tax rate that may apply if you take the money as income, depending on what you earn. Once again, the upshot is that you could pay less tax. 3. Pay less tax on your investments And as with any of your super investments, for most people any returns enjoy lower rates of tax than most other types of investments you make. Therefore your investment returns could give you more income in retirement. Will salary sacrifice work for me? Salary sacrifice contributions receive specific tax treatment, and as a result, this type of contribution tends to be better suited to those who earn at least $18,201 a year with a marginal tax rate of 19% or more. Those earning less than that amount might benefit more from making after-tax personal contributions in order to take advantage of the government co-contribution. Turn to page 15 of this booklet to find out more about personal after-tax contributions, and page 18 to read about the co-contribution. Do you work for DET? If you re a school-based staff member or principal employed by the Department of Education and Training (DET), the steps are the same, only you ll need to complete a Salary Packaging form instead, and send it to Smart Salary *. You ll find the form online at vicsuper.com.au/forms *Note that Smart Salary charges a separate fee for their service so you should check what fee will apply before you start (head to smartsalary.com.au). 12 VicSuper Extra Contributions

15 Annual Income How much can I afford my take-home (after-tax) pay to reduce by each fortnight What's the equivalent before-tax amount How much will I add to super after the low 15% tax rate is applied? Amount I salary sacrifice in one year Tax saved in one year $50 $76 $65 $1,687 $387 $37,001- $87,000 $87,001- $180,000 $100 $153 $130 $3,374 $774 $150 $229 $195 $5,061 $1,161 $200 $305 $260 $6,748 $1,548 $50 $82 $70 $1,811 $511 $100 $164 $139 $3,623 $1,023 $150 $246 $209 $5,424 $1,534 $200 $328 $279 $7,246 $2,046 For lower income earners, salary sacrifice may not be right for you but after-tax contributions could be due to government initiatives. It's probably best to seek financial advice on which type of contribution will suit you. For higher income earners, it may be worth having a chat to a financial planner as salary sacrificing may take you over the before-tax contribution cap depending on your income. Do you earn over $250,000 per year? If you do, your before-tax contributions will generally be taxed at 30%. SET UP SALARY SACRIFICE 1. Head to our website at vicsuper.com.au/forms, and download the Make a personal and/or salary sacrifice contributions through your employer form (V302). Or call us on for a copy. 2. Complete the form and then give it to your HR or payroll manager. 3. They will start making payments into your VicSuper account. John boosts his super and pays less tax John earns $80,000 a year once his compulsory 9.5% superannuation guarantee contributions are made. He s recently decided he can afford to salary sacrifice $5,200 ($200 per fortnight) into his super each year. But even though he s contributing an extra $5,200 directly from his salary into his super, his take-home pay only reduces by $3,406 per year ($131 per fortnight) not $5,200. Why? It s because salary sacrifice contributions come out of John s pay before income tax is calculated. This has the effect of reducing the salary to be taxed by the full amount of the original contribution. So John s taxable income has gone from $80,000 to $74,800. And the result? John s contributing more to his super, which could help him afford a better lifestyle when he retires, and he s reducing his annual tax bill. If John doesn t salary sacrifice If John does salary sacrifice Total income (after allowing for superannuation guarantee) contributions of 9.5%) $80,000 $80,000 Salary sacrifice contribution $0 $5,200 Taxable income $80,000 $74,800 Tax payable (including Medicare levy) $19,147 $17,353 John's take-home pay per year $60,853 $57,447 VicSuper Extra Contributions 13

16 2 Personal deductible contributions a present at tax time What are they? These are contributions you make into your own super which you can claim a tax deduction in your tax return. They re available to most members and are an alternative to salary sacrifice. Members who are self-employed or have difficulty accessing salary sacrifice at work may find these a better option. How and when it s your choice You can make these contributions as a one-off, lump sum to your super account, or make regular payments from your bank account or employer. You can make these contributions via BPAY, direct debit, cheque or money order (see below for details). We need to know you intend to claim a deduction for these contributions therefore you must complete a Notice of intent to claim or vary a deduction for personal super contribution. How can you claim these as a deduction? After you've made an after-tax contribution into your VicSuper account, you have until before you lodge you tax return and the end of the following financial year to claim your tax deduction. You have to let us know you intend to claim a deduction in your tax return by completing the Notice of intent to claim or vary a deduction for personal super contributions form before lodging your tax return. You'll then get a letter back from us which you'll need to use to claim your deduction in your tax return. How are they taxed? If you notify us of your intent to claim a tax deduction, they are treated as a before-tax contribution, so a 15% contribution tax applies. Which cap applies? These contributions fall under the before-tax (concessional) contributions cap. But only if you claim them in your tax return. If you don t, they fall under the after-tax (non-concessional) contributions cap. See page 9 for all cap details. MAKE PERSONAL DEDUCTIBLE AND PERSONAL AFTER- TAX CONTRIBUTIONS There are lots of ways to make contributions to your VicSuper account. Select from these options to find the one that suits you best. Any of the forms you'll need can be downloaded from our website at vicsuper.com.au/forms Or you can call us on for a copy. Online via BPAY 1. Log in to MembersOnline. 2. Select Build my Super, and then select Add to my Super. 3. Read and follow the prompts on screen. 4. You ll also be provided with a biller code and a reference number, so make a note of these. 5. Then, head to your financial institution s website (or use their phone banking services) to transfer your contribution, using your biller code and reference number as provided. 14 VicSuper Extra Contributions

17 3 Personal after-tax contributions a gift to your future What are they? Personal after-tax contributions are contributions that you make into your super from your take-home pay. That s what s left of your pay after income tax has been taken out and that s essentially why they re referred to as after-tax contributions. A lot, or a little it s up to you These contributions can take the form of a one-off, lump sum payment to your super account, or they can be a regular amount deducted from each pay or bank account. How are they taxed? This type of contribution generally doesn t incur any further tax once it reaches your super account. Which cap applies? These fall into your after-tax (non-concessional) contributions cap (see page 9). Cheque or money order 1. Head to our website and download the Make a personal contribution directly to VicSuper (V301) or Make a personal deductible contribution to VicSuper form (V311). 2. Complete the form, and post it along with your cheque or money order for your contribution amount to: VicSuper, GPO Box 89, Melbourne VIC 3001 Regular deductions from your salary 1. Check with your HR or payroll department if you can make personal contributions into your super directly from your salary. 2. Head to our website and download the Make a personal and/or salary sacrifice contributions through your employer form (V302). 3. Complete the form and give it to your HR or payroll officer (do not give it to VicSuper). They ll arrange the rest with us directly. Your employer must send deductions from your pay to VicSuper by the 28th day of the month after the month of deduction. Direct Debit 1. Head to our website and download the Personal contributions via direct debit (V307) or Personal deductible contributions via direct debit form (V312). 2. Complete the form be sure to include the monthly amount you d like us to direct debit from your nominated bank account and post it to us: VicSuper, GPO Box 89, Melbourne VIC 3001 VicSuper Extra Contributions 15

18 4 Spouse contributions it takes two What are they? Spouse contributions are contributions that you make into your spouse s super account on their behalf, or contributions that your spouse makes into your account. Making contributions to your spouse s super can not only help build their super it can also help you pay less tax (or vice versa). Spouse contributions To be eligible to receive a spouse contribution, the receiving spouse must be under age 70. Conditions apply between the age of 65 and 69 (inclusive). To find out more go to vicsuper.com.au/spousecont Spouse contributions can be particularly helpful in cases where one spouse has taken an extended career break (for example to look after children or a family member, or due to illness). The contributions from one spouse can help to boost the non-working spouse s super at a time when they may not otherwise be receiving anything into their super account. How are they taxed? Just like personal after-tax contributions, spouse contributions are made from your (or your spouse s) take-home pay (which is what s left of your pay after income tax has been deducted). So they re generally not taxed again once they reach your spouse s (or your) super account. However, they do count towards the receiving spouse s non-concessional contributions cap (that s your spouse if you re making the contribution for them, or you if you re receiving the contributions from your spouse). You can read more about this cap on page 9 of this booklet. Both of you could pay less tax Tax offset: the partner making the spouse contribution may be eligible to receive an 18% tax offset of up to $540 in each financial year if the spouse receiving the contribution earns under $37,000 (the tax offset reduces as income increases and phases out at $40,000). Tax effective: you and your spouse both benefit from the concessional tax rates that apply to super when you both contribute into each other s super. For more information go to our Member Guide at vicsuper.com.au/ memberguide Splitting your contributions Another great way of helping to equalise super balances between spouses is known as contribution splitting. This allows one spouse to split up to 85% of their before-tax contributions (that s superannuation guarantee contributions, any salary sacrifice contributions or personal deductible contributions they re making), with the other spouse. Not only can it help spouses to even up their super balances (which can be especially useful if one spouse has taken an extended career break and isn t making regular super contributions as a result), it may also have tax advantages. The original amount (before being split) counts towards the before-tax contributions cap of the spouse making the split. It does not count towards the after-tax contributions cap of the person receiving the split. 16 VicSuper Extra Contributions

19 HOW TO MAKE SPOUSE CONTRIBUTIONS You or your spouse can make eligible spouse contributions. Any of the forms you ll need can be downloaded from our website at vicsuper.com.au/forms Or you can call us on for a copy. Online via BPAY 1. Head to our website and download our Eligible spouse contributions form (V306). 2. Send your completed form to us: VicSuper, GPO Box 89, Melbourne VIC Once we receive your form, we ll mail you the biller code and reference number make a note of these as you ll need them to make your contribution (see step 4). 4. Head to your financial institution s website (or use their phone banking services) to transfer your contribution, using the biller code and reference number we gave you. Contribution splitting 1. Head to our website and download a Contributions splitting form (V310). 2. Send your completed form to us: VicSuper, GPO Box 89, Melbourne VIC VicSuper will notify you in writing when the contributions split amount has been debited from your VicSuper Fund account. Direct Debit 1. Head to our website and download an Eligible spouse contributions via direct debit form (V308). 2. Send your completed form to us: VicSuper, GPO Box 89, Melbourne VIC 3001 Cheque or money order 1. Head to our website and download an Eligible spouse contributions form (V306). 2. Complete the form, and post it along with your cheque or money order for your contribution amount to: VicSuper, GPO Box 89, Melbourne VIC 3001 TOOL AND RESOURCES Find out more about whether spouse contributions or contribution splitting might benefit you and your spouse. Our online Beeline service vicsuper.com.au/beeline can help you to test the impact of spouse contributions on your super account and your spouse s super (as long as you re both VicSuper members). Give our team a call on for professional financial advice on whether these strategies could be effective for you and your spouse. In most cases, this type of advice for members is at no extra charge. VicSuper Extra Contributions 17

20 5 Government co-contributions a little from you; a little from them What are they? The government co-contribution is a bonus super contribution from the government, specially designed for those on lower incomes as a way of helping to boost their retirement savings. Give and take If you re eligible, you must first make a personal after-tax contribution to your super account before the end of the financial year (we cover these on page 15 of this booklet) in order to receive it. Do I qualify? To be eligible for the government co-contribution in the 2017/18 financial year, you need to: earn less than $51,813 a year earn at least 10% of your total income from operating a business or as an employee, or both not be a temporary resident of Australia at any time during the year (an exception applies for New Zealand citizens) be less than age 71 at the end of the financial year lodge an income tax return for this financial year had a total super balance of less than $1.6 million on 30 June 2017 make an after-tax contribution into your VicSuper account but don t exceed the after-tax (nonconcessional) contributions cap. What contributions don t qualify? Your employer Superannuation Guarantee contributions (they re the compulsory contributions that your employer must make on your behalf), salary sacrifice contributions, personal deductible contributions and spouse contributions do not qualify you for the co-contribution. How much can I get? If you re eligible for the government co-contribution, how much you ll get depends on how much you add to your own super in personal after-tax contributions, and your total income for that financial year. The co-contribution then reduces as your income increases, scaling down until it cuts out completely at an income level of $51,813. At its maximum, for every dollar you contribute, the government will add a further 50c to your super, up to a maximum of $500 per financial year. To receive the full $500, you must earn $36,813 or less, and make a personal contribution of $1,000 or more. NEED A LITTLE HELP? To help you understand whether a before or after-tax contribution is right for you, if you re a VicSuper member just login to Beeline our online personalised guidance and advice service. Alternatively, just give our team a call on How are they taxed? Co-contribution payments are not taxed and don t count towards any contributions cap. Remember, the personal after-tax contributions that you make in order to qualify for the co-contribution are not generally taxed either. 18 VicSuper Extra Contributions

21 How Kellie got a little extra from the government Kellie is a new mum. She s just returned to work on a part-time basis, and she earns $35,000 a year (gross). She s keen to put more towards her super, so she s started contributing an extra $39 a fortnight in personal after-tax contributions. Over the course of a year, she ll contribute a total of $1,014 in after-tax contributions. Kellie also meets the eligibility criteria for the government co-contribution. So when she lodges her tax return early in the next financial year, thanks to her contributions, she ll receive an extra $500 from the government. That s a 50% increase in her contributions. TOOL AND RESOURCES Head to Beeline at vicsuper.com.au/beeline to find out if you re eligible to receive the government co-contribution, and how much you ll need to contribute in order to maximise the amount you re entitled to. Or if you d prefer, give our Member Centre a call on They can take you through your eligibility, how much you can receive, and what you ll need to contribute in order to receive it. HOW TO GET A GOVERNMENT CO-CONTRIBUTION If you re eligible for the cocontribution, and you ve made the required personal after-tax contributions to your account, then you ve done everything you need to do the rest will happen automatically. The ATO will automatically match information from your yearly tax assessment with the information we provide about contributions into your account. The co-contribution will be paid directly into your nominated super account in the following financial year (usually in December). To specify which fund the co-contribution is to be paid into, you'll need to complete a superannuation fund nomination form. And the amount will then be preserved until you meet a condition of release (you can refer to page 7 of this booklet to find out more about this). VicSuper Extra Contributions 19

22 Helping you put it all together We re here for you it s what we do We want you to have a great retirement, and we re here to help you achieve that. Whether it s tailored advice over the phone, attending one of our seminars, online tools and information, or sitting down with you and helping do the paperwork VicSuper is here for you. Online tools, resources and info all at your fingertips Visit our website for a host of information and tools, including our Beeline service exclusively available to VicSuper members. Using easy-to-follow prompts and great tips along the way, Beeline takes the guesswork out of deciding what s best for you and your super, and shows you simple and effective ways to set and achieve your retirement planning goals. You can even use our online forms to start taking action right now. Jump online vicsuper.com.au/beeline Phone support and personal advice for members If you ve got any queries, or if you d prefer to chat to us over the phone our Member Centre team is here to help you out, 8.30am 5.00pm, Monday to Friday. For professional financial advice about your super, our Member Services team can refer you directly on to one of our phonebased advisers. It s straightforward. It s tailored to you and your super, and it s usually at no extra charge for members. Give us a call Visit for a chat If you prefer, you can come in, sit down, and go through your super and retirement planning questions in person, or just get some help with the paperwork. It s all in a day s work for our Member Centre and it s exactly what we re here for. So whether you d like some easy to understand advice on your super account (usually at no extra charge) in person, or if you d like to take advantage of our more in depth, expanded financial advice services for super and non-super planning (fees may apply; see below for more information) give our team a call today or jump online and make your appointment. Make an appointment or go to vicsuper.com.au/advice A word on financial advice In most cases, the superannuation advice you receive from VicSuper will be at no extra charge to you this is usually the case for simple advice over the phone relating specifically to your super. However, a fee may be payable for certain types of advice, for example in cases where more detailed financial advice is warranted. In these cases, we ll tell you of any costs up-front and there s no obligation. 20 VicSuper Extra Contributions

23 The information contained in this booklet is given in good faith and has been derived from sources believed to be reliable and accurate. No warranty as to the accuracy or completeness of this information is given and no responsibility is accepted by VicSuper Pty Ltd or its employees for any loss or damage arising from reliance of the information provided. This is intended to provide general advice only about VicSuper Fund and does not take into account your particular investment objectives, financial situation, objectives or specific needs. You should therefore consider the appropriateness of the advice in light of your own objectives, financial situation or needs before acting on the advice. VicSuper recommends you seek professional advice for your own circumstances before you take any action. You can contact VicSuper to make an appointment to see one of VicSuper s representatives. VicSuper Pty Ltd ABN ( VicSuper') is the Trustee of VicSuper Fund ABN The Trustee holds an Australian Financial Services Licence (AFSL ) under the Corporations Act 2001 (Cwlth) and a RSE Licence under the Superannuation Industry (Supervision) Act 1993 (Cwlth). Under its AFSL, VicSuper is licensed to deal in, and provide financial product advice on superannuation products. At present, VicSuper representatives are limited to providing financial product advice on VicSuper products; ESSSuper Revised, New, SERB and Transport Schemes; providing advice on whether a member should consolidate or roll over their superannuation holdings (excluding personal advice on self-managed superannuation funds) into VicSuper; and general superannuation matters. VicSuper is also able to provide financial advice on a broader range of financial matters and products for an additional fee. This advice is provided under a third party AFSL. VicSuper will not assume any responsibility or liability for this advice VicSuper Pty Ltd. All rights reserved. No part of this communication, covered by copyright, may be reproduced or copied in any form or by any means without the written permission of VicSuper Pty Ltd.

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