When it comes to superannuation, a lot of misconceptions are floating in the air. For the longest time, people believed that the government-owned superannuation until the person retired. However, the truth is far from it.
Although every employer and employee has heard of it, not everybody is aware of how superannuation works. Thus, to help you, here are the things you must know about it.
1. Requirements For Superannuation
Did you know that there is only one requirement that you need to fulfil for superannuation? Before 1 July 2022, there used to be two eligibility criteria, but it is no longer the case. These were:
- You had to be 18 or above
- You were paid at least $450 or above per month
The age you start superannuation in Australia has stayed the same, but there is no such limit on the income now. You could be earning $1 (hypothetically), and your employer has to pay your super. For those under 18, you must work more than 30 hours to receive this.
There is no such restriction about your employment type. You could be a part-time, full-time or casual employee.
2. Superannuation For Self-Employed People
Are you wondering who pays superannuation to self-employed people? As self-employed people are not employed by other individuals, they are the ones who would pay super for themselves. However, the law does not require them to pay it.
Even if you are self-employed, there will come a time when you have to retire. So, you should pay yourself super. Along with this, you can also claim tax deductions, which is again a bonus.
3. Choose a Fund for Your Super
The majority of people choose the superannuation fund for their contribution. There is a standard choice form, which your employer may provide you if you are eligible to choose.
There are instances when you might not be eligible to choose your super fund. Usually, if the super is paid under an industrial agreement or state award, or you are a state public sector employee or federal employee, you are not given the right to choose.
In case of confusion, you can always reach out to your employer. They will tell you whether you can choose your super fund or not, along with the reason.
4. Is Your Employer Making the Right Payments?
There are specific superannuation rules for employers set by the ATO. For instance, currently, an employer has to pay 10.5% of your salary into the superannuation fund. Since this contribution is for your retirement, ensure that you are getting the deserved amount.
You can ask your employer about your super. Ask them about the fund they are paying into, the amount they are paying and how often they pay it. If you are doubtful, you can use the tools on the official website of the Australian Tax Office to check.
5. How Can You Increase Your Super?
You can easily increase it by making your own contribution. Salary sacrificing is a way to contribute to your superannuation fund. If your and your employer’s contribution is $27500 or less, no additional taxes will be applied.
Disclaimer: The information on this website is for general purposes only and should not be relied upon for making legal or other decisions. The advice provided in this article is general in nature and is not subject to the personal financial situation and needs of any individual. Clear Tax tries to keep the information accurate and up-to-date; however, you should bear in mind with changing circumstances, the accuracy and reliability of the information will not necessarily remain the same. The information is by no means a substitute for financial advice.
