claire-n-tel

Hi! Just wondering if anyone can help me with superanuation? I think I have got things muddled up, so sorry for the stupid question

If you earn $100,000 a year and your employer pays 9% to your super does that mean if you withdraw it after 3 years you will have $27,000?

I'm pretty sure I have this wrong. Oh and I know you can't just take it out if you are here I am talking about a temporary resident returning home.

Cheers

spottydog

No, you have to pay tax on it and you are also at the mercy of the markets the superfund invests in (plus have to pay their management fees).

The super part of a $100k package will amount to ~$8250)

claire-n-tel

Thanks Spottydog, sorry, still being dim here! So I would with draw 8250 for each year worked less tax etc?

spottydog

Maybe, you would put in 8250 per yar before tax, what you get out will depend on fees charged and what the markets do during the time period you are here as most super funds invest heavily in stocks and shares.

ExSmoggie

Tax on employer super contributions is at a flat rate of 15%.
Admin fees usually equate to around $1.50 - $2/ week dependant on the fund (industry funds tend to be the cheapest)
Usually the fund will automatically deduct life insurance and TPD insurance premiums as well. You can cancel this insurance with the fund if you wish but you are generally signed up automatically and need to contact them to opt out.
As for investment returns over a 3 year period, that is anyone's guess. However, within most funds, you can select an option of how your funds are invested. Again it depends on the fund but most have at least four options (conservative, balanced, growth and high growth) Usually the default position is 'balanced' but you can request a conservative option (lower risk, more cash based investments) which may be a better option if you are only looking at holding super for a 3 year term. Generally speaking there would be less chance of growth but also less risk of loss.

bingobob777

Just been researching this myself

You pay 15% tax on the way in and if you're on a 457 and returned home you pay another 35% tax.

Forget super as a means of saving on a 457, you're going to lose 45% of it in tax. Whatever you do, DO NOT pay any more than the minimum 9%.

Superannuation is a con for everyone, but it's an even bigger con for 457 holders.

KJCherokee

Super is intended as a retirement fund - as a result you get heavily penalised for withdrawing the money under normal retirement age.

Amazulu

You pay no tax on the 9% compulsory super.

Whether super is a con is for you and others to argue over (I'm not getting involved), all I know is that there are many people in this country sitting on huge pots of super on which they pay minimal fees, and if they retire at the right time, can take much of it out tax-free.

Bermudashorts

Why do you say that?

bingobob777

So I'm imagining the 15% tax that gets taken off every payment I make?

bingobob777

well for a start how do you think all the "investors" get paid?

They get a bonus when they perform well, yet hand nothing back when they perform badly

I would rather choose what to do with money I earn, lining the pockets of someone else isn't a high priority for me.

Most people would do just as well sticking their 9% super in an account earning 6%, no fees, no charges, no chance of a loss.

That would mean sucking the lifeblood out of the corporates, and given that most politicians are in the pockets of big business it ain't going to happen. In fact we're more likely to see a rise in the compulsory super, leading to more fees etc etc etc

KJCherokee

True in the strict sense of the wording - it's the superannuation fund which pays the 15% tax before they put the money into your account.

Hey, if you can find ways to invest your money which give the same or better tax advantages as super, go for it! Me, I'd rather put money into super at 15% tax, and then pay no tax on the income from it when I take it as a pension, than pay 45% tax on it then invest what's left and pay tax on the income and the capital gain. But I know my limitations with regard to investing - cannier men than me can make significant profits and find ways of avoiding paying huge amounts of tax.


Even if this was possible (which it isn't because you never actually have the 9% to invest, your employer is legally bound to pay it directly into the super fund), you would be taxed on the money before you could put it into the bank account. If you earn less than $37,000pa then you pay 15% tax either way, anything over this and your top tax rate exceeds the super tax rate and you lose money: earn over $180,000pa and the difference is 30%!

bingobob777

well of course you'd need the same tax breaks. But as it stands you can't and that's my whole point.

KJCherokee

There is nothing to stop you setting up your own self-managed super fund (see this ATO webpage) and investing the money where you like (within the restrictions laid down by the legislation and the ATO). But the time and effort you need to put in to ensure compliance is just not worth it for most of us.

You can even have a Ferrari as a superannuation investment - but you aren't allowed to drive it!

Amazulu

Don't know, don't care.

All I know is that my super is deducted from my pre-tax income.