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Superannuation members must be wary of new contributions cap: CANSTAR
CANSTAR has warned that the reduced concessional cap for superannuation contributions is likely to catch some people out.
It said if members exceeded their concessional contributions cap and after-tax contributions tax, they could face a 46.5 per cent tax rate, charged twice.
The 93 per cent tax increase example given by the Australian Taxation Office means members should be checking their superannuation contributions now, CANSTAR said.
CANSTAR research manager Chris Groth said despite the potential for exceeding the cap, super contributions were a good way to keep your money from the Government.
"Despite the potential tax traps, contributing extra to your super investments is a good thing, as your contributions' tax is only 15 per cent and the tax on your investment earnings is only 15 per cent. This compares to, say, a term deposit which you invest in with your tax dollars and then pay the full marginal tax rate on your earnings," he said.
Groth said superannuation members should be speaking with their financial planner to ensure they receive the most out of extra contributions.
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