Superannuation – Australia

   Superannuation

1. Super Annuation or Super (Both are the same)

Meaning:

1. Superannuation is money put aside by your employer over your Employment.

2. You can withdraw your Superannuation money only in certain circumstances – 

For example, when you retire or when you turn 65 years old.

3. Eligibility to determine Super Annuation when you received salary and wages, Not when the income is earned.

4. Super Annuation is compulsory for all Resident Australian & Working using TFN & Who earns more than $ 450 per Month

5. Minimum superannuation contribution is required to be made by the employer. For FY 21-22 10 % of the ordinary Time Earning OTE. This is called Super guarantee (SG)

Superannuation Guarantee Rate (SG) 

6. Ordinary Time Earnings (OTE) means 

What you earn for ordinary hours of work, including 

• Over-Award Payments, 

• Bonuses, 

• Allowances 

• Paid leave

• Commission

• Shift Loading.

Payments for Overtime hours are generally not included in Ordinary Time Earnings (OTE).

7. Government super contributions

• If you’re a low-income or middle-income earner, you may be eligible for super co-contribution up to $500 from the Australian Government.

•  It’s important for you to lodge a Tax Return 

8. Super Annuation withdrawals are generally taxed at your marginal tax rate at 30% percentage rebate

9. Personal Super Annuation Contribution 

In addition to the employer’s Contribution, Employees can also make their own contribution to Superannuation is called Personal super contributions

There are 2 types of contributions you can make to your super fund

Note: You can increase the concessional contributions cap that applies to you when you carry forward unused concessional contributions amounts from previous financial years.

10. Claiming Deduction under D12 Personal Super Annuation Contribution

There are limits on how much Deduction you can claim.

11. Once the money is placed into your super fund it is then invested by your superannuation company.

Sample Super Investment Breakdown

12. Type of Super Fund?

1. Retail Super Funds

• Run by Bank or Investment Company or Insurance Company

• Anyone can easily join this Super

• Offering widest range of Investment Options Excluding SMSFs

• Offer Various Insurance Products to the Fund

• Offer Financial Advice

• May Offer to View your Super

Examples of Retails Super Funds:

• AMP Flexible Super

• Bendigo Smart Start Super (Bendigo Bank)

• BT Super for Life (Westpac)

• ING Direct Living Super (ING Direct)

2. Industry Super Funds

• Some are open to Anyone, and some are limited to employees in Specific Industry

• Available Investment options usually are smaller than Retail Funds

• Industry Funds are Not for Profit Organizations

Examples of Industry Super Funds:

• Australian Super

• REST Industry Super

• Sunsuper

• Hostplus

3. Corporate or Public Super Funds

• Setup by an Employer for its Employees.

• Member is restricted to Current and Former Employees.

• May Run Industry Funds or Retail Funds.

4. Self-Managed Super Funds (SMSFs)

• It’s a Private Super Fund You Manage yourself.

• Can have up to Four members and also Trustees responsible for Decisions and to comply with Laws.

• No Membership Fees.

• But may incur other costs such as Administration costs, Investing Costs, Accounting Costs, and Auditing Costs.

• More Control of Investment in choice.

Overview of Superfund Accounts and Assets by Fund Type 2019

Simply Looking at 12-Month Difference May not be enough, it can be a better idea to look at the Super Fund performance over the many years, which is something you can able to find on Super Fund Statement

5. Super Fund offers Three types of Life Insurance 

1. Life Cover also called Death Cover (Lump sum Income to your beneficiary when you die or Terminal Illness

2. TPD Insurance (Seriously disabled and are unlikely to work again)

3. Income Protection Insurance also called Salary Continuance cover (This pays a regular income for a specified period may for 2 Years or 5 Years or Up to Certain Age)

6. Super Annuation Payable (Super Annuation is Employer Expenses) Super Annuation you can claim a deduction based on Cash Basics because running payroll run super Annuation calculated. That Payroll runs will calculate on Accrual basics 

So, Entry into the Book

Super Annuation Expense (Expenses) Dr $5,000

To Super Annuation Payable (Liability) $5,000

(Accrual Entry created)

Super Annuation Payable a/c Dr $1,000

To Bank a/c                 $1,000

(While making payment to Superannuation by Company)

So Still Payable will be $4,000 on my balance sheet

So, Movement in Provision 

13. First Home Super saver scheme (FHSSS)

1. Help Australian to boost their savings for buying a home for the first time

2. FHSSS allows Australians to build deposits inside super Annuation 

You can withdraw your FHSSS when you are ready to D13 – Deduction for project pool

3. buy house

4. ATO can tell what is the maximum amount you can withdraw from FHSSS