Makes no difference you pay 15% tax on it.

Which is much better than the marginal tax rate for anyone earning over $37k?

he/she said

You pay no tax on the 9% compulsory super.

"You" don't.

The super fund pays the 15% tax.

Best regards.

oh ffs, they pay 15% of your money, hence you pay.

Have you got a problem?

"... hence you pay ..." is a distortion. You (as the individual) are not paying anything - you never had the money in the first place.

Best regards.

Problem? yeh a little bit.

x gets taken from MY salary, the one I worked for
x minus 15% is left in MY fund

You'll be telling me I don't pay tax next as I never had that? But if I never had it and never paid it how can I get some back?

Or quite possibly I don't have a car sitting on my driveway that I pay with a novated lease because according to you I never had that money, did it just magically appear?

seems simple to me

Salary plus Super...

Super taxed at 15% = less tax than had it been in your wages.

You just dont get the money until you retire or leave Aus!

When you got the job were you told X salary?

Then when you got paid it was X salary minus Super?

Your second point,never let the tax tail wag the investing dog,tax should be the least of your worries.Better tax advantages are created by keeping money out of super.

As I put up years ago when an SMSF fund was fashionable and heavily promoted.Choose a company,i said ANZ,put 100k into it ,which at the time bought 4000 shares,then use the DRP and sit back.

Time now proves it was the wrong time to invest (2007 I think it was).The market crashed,however the idea of compounding is "time is money.

A rough average you double your holding every 12 yrs,so come July 2013 you have 6000 sharea and of course 2019 you have 8000 shares.Now suppose this is 2013,you have 6000 shares in ANZ,each producing $1.50 in dividend income.You have $9000 going into buying more shares.The interest you pay on the loan is $7000,this is a tax deduction ,you get 2100 back off the tax man,make it a round number and call it 2K.

Thus your outlay is 5K,the investment going into your retirement fund is 9K.Put the same 7K into a super fund and they take 15% tax,call it $1000 in a round number.For the same uotlay you have 6K going into super,and pay all the fees etc,or pay5k and have 9k reinvested by keeping it out of super.The longer you leave it the more money is reinvested as you get more shares,dividends increase etc,and no fes to pay.

To look at this in the long term,when I retired I had around 65k in super.That was being in it from day one,(1986 if I recall correctly).I bought ANZ at around 8$ each after the asian melt down (1997 or 8)So 15 yrs ago say 6000 shares cost 48K ,call it 50k in around number,18months average wages,by 2021 the holding should be 24000 shares worth whatever they are worth then,and producing whatever income they produce then.

The important bit is say 12000x $1.5 is 18K,i pay 50k x7%,thus $3500,THE TAX REBATE IS $1000 IN A ROUND NUMBER,so I pay $2500 and 18K GOES INTO MY RETIREMENT FUND.Not bad is it.

Then the free money strategy comes in,not using the DRP and being positively geared.same 50k,income from 6000 shares is 6K x $1.40 (last year) thus $8400,pay the interest from that and you are left with a 5K round number without using the tax aspect.The Warren Buffett method would be to use that positive cashflow to buy shares in other companies which produces more positive cashflow to buy more shares and so on.

Luckily the crowd will refuse to see reality and never do that,they have the experts and newspaper articles and popular opinion to tell them not to do that,and they will see what they want to see.Wonderful old saying,what you are looking at is not important,what you see is vitally important.

Good luck

geordie downunder

More figures that people will refuse to see.6000 shares if this was 2013 ,would now be worth 132K,compounding will go on regardless of daily movements on markets.Starting from the 2007 date if people are 30 yrs away from retirement then they have around 3000shares in ANZ by 2037,that should cover a very comfortable retirement along with the basic super.

30000 shares today would be producing around 60K of gross income,and a tax rebate using SATO etc,probably the 60kwould be close to tax free.Add some super on to that if it had been 9% from 1986 and a comfortable retirement is there.

geordie down under

Very pleased I don't employ you ...

My perspective is that superannuation is an additional employer borne cost - additional to gross salary.

Similarly, your employer facilitates the tax efficient purchase of your car via a novated lease. You could have paid for it out of after tax salary.

In saying this, I now see your perspective. I just don't agree with it.

Best regards.

Is there a website were you can compare super fund performance?

I think you should adjust your thinking, you seem to think that "somebody" stole something from you. Seeing as you are getting so angry about this, I would suggest that you focus only on salary (ex super) from the outset. Negotiate the salary ex super level that you think you deserve.

And then accept that your employer makes an additional contribution into super, which you will benefit from in the future.

Many people don't save, don't know how to invest. The contribution to super means they have something in old age. It is a good policy, it also isnt particularly unusual around the world to find that companies make pension contributions that one cannot access straight away. Get over it.

That is not strictly true,super is a shared cost.When Hawke and Keating brought in huge changes to the Oz economy,deregulation of banking,lowering of tarriffs and the accord,super was part of that.Means testing was also part of it,they saw that birth rates were dropping and people would need to fend for themselves.Most govts around the world saw this and thus we had 401k plans in the US,the many things they tried in the UK,and super in OZ

CGT came in but imputation came in to avoid double taxation of dividends,I liked that one,I liked it even more when around 10 yrs later excess franking credits could be refunded,rather than lost.I didn't like super at all

ANYHOO

The unions agreed in 1986 that a 3% wage rise would be foregone and this would be the initial payment into super.then super would gradually increase to 15% over a number of years,employers covering the rest of it or employers covering up to 12% and a further 3% from employees.

Large companies were very happy,it got them off the hook of DB pensions which most of them had ,and they didn't have to give workers a rise,only put 3% into union funds,which still run today.The accord also meant that rather than have to give workers a %age pay rise,it was a flat 8$ per week for a few years,thus real wages dropped.

To Howard et al this was the end of the world,Oz industry would collapse under this burden,the workers would have to take care of themselves,this super was on top of a universal health care system (medicare @1%),OZ would be a wasteland and all companies woiuld go bust,foreign companies would never come here WE'RE ALL DOOMED I TELL YOU ,DOOMED.Once Howard was elected of course plans for 15% were scuppered,they called it off but were afraid to cancel super AS PEOPLE WERE DREAMING JUST AS HARD THEN AS THEY ARE NOW,super means I retire with a fortune (ROFLMAO)
Now that super may increase to 12% by 2020,once again we are doomed I tell you, doomed.

Small companies just kept the 3% rise.This led to the SGC in 1992,small companies used that wonderful word LTD(now LLC) to dodge obligations,they became phoenix companies.At the end of the year they went bust,so did not have to pay super.One week later they opened up again,same owners,same management,same workers,different company name,no recourse.

The accord probably led to the casualisation of the workforce.Due to the 8$ per week rises the smart people spotted the opportunty of casualisation.You can earn $10 per hour with holiday pay,sick leave etc.Or,you can sell those conditions for $13 per hour flat rate,and we would like you to work 55 hrs per week.You would know this better than I but my understanding at the time was that those people were no longer employed by the company so payroll tax was avoided,and Skilled eng and the like started on the path of becoming big companies.

Those are the memories of my days as a shop steward,I may as well have tilted at windmills in the UK as well and fought against closure of shipyards on the Tyne and Wear

On the bright side however I decided I had better learn about financial markets to take care of myself,shit did that come good.

Just a bit of history to correct your slight error

Geordie downunder