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How Super in Australia Works

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If you’re wishing for a relaxed and worry-free life in retirement, devote some of your time discovering how super in Australia functions. By doing so, you may be able to considerably improve your super which can have a positive effect on your future way of life.

Superannuation (super) definition

Superannuation or super is a tax-effective way to conserve money for your retirement. It resembles a managed fund where your money is combined with money from other super members which are then invested on your behalf by qualified investment managers. Generally, members won’t be able to access money made from super up until their retirement age. For this 2018/2019 financial year, any member who was born 30 June 1962 or earlier complies with the retirement or preservation age.

Your employer will make payments to your super fund. You are also able to top it up with your own money. The government may likewise make payments to your super if you are a low-income earner.

How to decide on a super fund

Most individuals can decide which super fund they would like their super contributions to go to. Contact your employer to be sure that you are able to choose which super fund you prefer. Chan & Naylor Wealth Management specialists can also determine which super in Australia is the most beneficial for you and your needs.

When selecting a super fund, inform your employer by filling out this standard choice form from the Australian Taxation Office (ATO) or from your company. If you do not or cannot select your own super fund, your employer will put the money right into a default super fund, which is referred to as a MySuper account.

Making payments for super in Australia

There are generally three types of super contributions: employer contributions, personal contributions, and government contributions.

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Employer contributions

Generally, an employer should pay an amount equal to 9.5% of an employee’s wages into their super fund account. This is on top of an employee’s salary or wages. Throughout your working life, these contributions add up or accumulate which is why they are called accumulation funds.

Employer contributions are based upon your ‘ordinary time earnings’. Ordinary time earnings are what you make for ordinary hours of work. This includes over-award payments, commissions, bonuses, allowances as well as paid leave. So for instance, assuming that your ordinary time earnings are $50,000, you may be entitled to an additional $4,750 into super.

If you are a self-employed individual, you are accountable for making your own super contributions.

Personal contributions

Individuals can make personal contributions through salary sacrificing. This means your employer can direct a portion of your pre-tax revenue into super. It will be deducted by your company and sent out to the fund with your employer contributions.

In addition, an employee may ask their employer to make personal contributions from the money that they’ve paid tax on. Lower income earners that do this may be qualified for government co-contributions.

Another way to make personal super contributions is by bank transfer. A person can transfer some of their savings into their super account through BPay or direct deposit.

Furthermore, super members can transfer some or all of their super from a different fund into a main super account.

Additional contributions from the government

Should you decide to put your own after-tax money into super, you may be able to receive a government co-contribution. Lower income earners can enjoy up to an additional $500 by simply making personal after-tax contributions.

If you want to control your super in Australia and create an enduring wealth creation strategy, contact a Chan & Naylor Wealth Planning specialist here today.

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Aside from superannuation services, have a look at our other accounting and advisory services that we do to help you achieve greater financial success.

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The Chan & Naylor Group has national offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can give you great tax accounting advice. Contact us today.



The material on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this website are provided for illustrative purposes only.

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