With the possibility of a new superannuation tax flagged by the Federal Opposition Leader of 15% tax on income over $75,000 pa within a super fund – Q: Does it still make sense to contribute to super and/or maintain my existing superannuation assets?
With the distinct possibility a new tax will be introduced on higher superannuation balances at some point in the future, the superannuation structure will continue to provide a lower taxed environment to build and accumulate assets. Income earned personally (e.g. on assets invested in a personal name rather than in superannuation) will be taxed at marginal rates which start from 19% once income exceeds $18,200 pa and go up to 49%. This first personal tax threshold of 19% is still higher than a possible new superannuation tax of 15%. Therefore superannuation will in most cases remain beneficial. We note depending on the age of the individual investor they may be entitled to tax rebates which mean a slightly higher personal income could be earned tax free. Circumstances will vary based upon the individual’s situation.