Understand the fundamentals of contributions and self managed superannuation
A self managed superannuation fund is a fund that is created by an individual or a
group of individuals to be able to manage their own retirement monies and have a
larger control over their own investments. However, it is important to understand that
there are various aspects of the self managed superannuation that need to be
understood and one among them is contributions.?
Contributions are monies that are put into the self managed superannuation when the
fund is created. Undeducted contributions are funds that are given into the self
managed superannuation for which tax deductions are not sought after. These are
contributions that are taken in by the fund without the tax and are returned at the time
of retirement without tax. The amount in the undeducted contributions is also not
covered under the Reasonable Benefit Limits or RBL thresholds.?
You can also make co-contributions with an SMSF if you earn less than 40K, the
government will also match your personal contributions to the self managed
superannuation up till about a thousand dollars an annum. There are different slabs
that exist in terms of the help that the government gives based on the annual income
that you have.
The employer contribution to self managed superannuation funds is taxed. Only the
amount that is contributed with the after tax money that you earn is not deductible.
However, self employed people can claim $5k as deductible contributions. An
additional 75% contribution can also be obtained based on age. The remaining is
treated as undeducted contribution.
Mel writes about self managed superannuation among other finance related topics.