What every employee needs to know about super

The ATO has recently released their publication, "Super - what you need to know."

If you’re new to the workforce, changing jobs or you need to know how to make the most of your super savings, this publication will:

- help you understand how super works
- provide the steps needed to make the most of your super at different life stages, and
- show you where to go for more information.

You can download a free copy of the publication as a PDF directly from the tax office website HERE.

Tax Office warns of illegal early access to superannuation

In like vein to yesterday's post on early withdrawal of super, the ATO has recently released a media alert warning people to beware of shonky schemes:

The Tax Office has warned people from non-English speaking backgrounds to beware of schemes offering access to superannuation benefits before retirement.

Deputy Tax Commissioner Raelene Vivian said schemes offering early access to superannuation for a fee are illegal and anyone involved faces the loss of their super benefits, legal penalties and a hefty tax bill.

“We have detected promoters offering early access schemes to people from non-English speaking backgrounds in western Sydney.

“Anyone who is offered a scheme which, for a fee, arranges access to their superannuation before they retire, should contact the Tax Office on 13 10 20 without delay.”

Ms Vivian said promoters are misusing self managed superannuation funds they have established or that they establish for their clients, to access superannuation benefits.

She said they are charging fees of up to 20% or more of the fund’s assets for their services.

“They then claim the client can withdraw the money to pay off debts or to fund the purchase of a home, to buy a car, a boat, pay for a holiday or other purposes.

“Involvement in early access to superannuation schemes as either a client or a promoter is illegal and attracts significant legal and financial penalties.”

Ms Vivian said early access to superannuation is only granted in cases of severe financial hardship or on compassionate grounds with approval from the Australian Prudential Regulation Authority.

“In these situations people do not need the services of a promoter and no fee is required.”

Q & A: Early Release of Superannuation

This weeks question is another common query; can you withdraw the money in your superannuation early?

This seems to be one of the first 'solutions' to pop into the mind of a lot of people when really it should be considered only as a last resort.

By law, you generally get your super only when you:
- permanently retire from the workforce, and also
- reach the minimum age set by law, called your 'preservation age' (this is typically between 55 and 60 depending when you were born).

You can get your super earlier only if you:
- suffer permanent incapacity for work, or
- possibly in cases of severe financial hardship, or
- on 'compassionate grounds'.

Severe financial hardship

Contact your fund. If the rules allow early release of benefits, you must satisfy the trustee that you have been receiving a Commonwealth income support payment for a continuous period of 26 weeks and you cannot meet your reasonable and immediate family living expenses.

Compassionate grounds

Contact your fund. If the rules allow early release of benefits, the 'compassionate grounds' are set out in the law. The Australian Prudential Regulation Authority (APRA) must consider your application first, before your fund trustee can make a final decision.

Compassionate grounds involve medical treatment for serious conditions that is not readily available through the public health system, transport for medical treatment, changes to a home or vehicle because of a severe disability, palliative care, funeral and burial expenses, or to prevent the forced sale of your home by your mortgagee.

Illegal early access

Avoid illegal schemes that try to get your super money out early, and save yourself from getting cheated and from heavy tax and legal penalties. These schemes are sometimes promoted by word of mouth or shady advertising.

Report to ASIC or the Australian Tax Office (ATO) anyone who tries to talk you into getting your preserved benefits early through a self-managed super fund or for a fee. AVOID THESE SCAMS and do not risk your money.

Source: Information for this response has been sourced from the Australian Securities and Investments Commission.

Superannuation Transitional Rules: Myths, Facts & Tips #1

In preparation for 'simpler super' the commissioner has released a series of factsheets to help people understand what is fact or fiction when it comes to superannuation.

Transitional rules:

Myth
Until 30 June this year an individual can borrow $1 million to put into their super and claim the interest as a deduction.

Fact
Interest is not deductible for individuals.
However, employers can continue to claim a deduction for interest on money they borrow to pay into super funds for their employees under the special business expense deduction rules.

Tip
If you are considering borrowing money to put into your own super we suggest you seek financial advice.

Superannuation Age Rules: Myths, Facts & Tips #2

Myth
I am over 60 and on a pension so I don’t have to lodge a tax return.

Fact
People getting a pension from taxed funds – which is most funds – and who have no other source of income will not need to lodge a tax return.

However, people with pensions from an untaxed fund, or who have income from other sources will still need to lodge a tax return.

Superannuation Age Rules: Myths, Facts & Tips #1

In preparation for 'simpler super' the commissioner has released a series of factsheets to help people understand what is fact or fiction when it comes to superannuation.

Age rules:

Myth
Everybody over 60 can take their money out of their super fund tax free and keep working.

Fact
This is only true for money taken out of taxed funds. It also depends on the type of fund and how you take the money out.

Tip
If you are over 60 and considering taking money out of your super but continuing to work seek financial advice or talk to your super fund.

Superannuation Co-Contributions: Myths, Facts & Tips #4

Myth
You have to apply to receive the Super Co-Contribution.

Fact
There is no application process for Super Co-Contribution – it is paid automatically to eligible people who make a personal contribution to their super.

Tip
To make sure you receive any co-contribution you are eligible for, make sure your fund has your tax file number and your contribution is with your fund before 30 June. The Super Co-contribution will be pain into your super fund after you lodge your income tax return.

Superannuation Co-Contributions: Myths, Facts & Tips #3

Myth
Everyone can get a Super Co-Contribution of $1.50 for every $1 they contribute to super, regardless of how much they contribute and earn.

Fact
The maximum Super Co-Contribution people can receive is $1,500 per year. People earning $28,000 or less per year receive $1.50 for every $1 they contribute up to a maximum co-contribution of $1,500 per year.

The amount of co-contribution paid for each dollar of personal contribution made by people earning more than $28,000 but less than $58,000 a year reduces on a sliding scale.

Tip
Use the ATO calculator to work out how much co-contribution you could receive.

Superannuation Co-Contributions: Myths, Facts & Tips #2

Myth
I never have $1,000 to contribute at any one time so I miss out on the Super Co-contribution.

Fact
You can contribute small amounts of personal contributions over the whole year.

Tip
If you are eligible, Super Co-contributions are paid into your super fund automatically once you do your tax return

Superannuation Co-Contributions: Myths, Facts & Tips #1

In preparation for 'simpler super' the commissioner has released a series of factsheets to help people understand what is fact or fiction when it comes to superannuation.

Super Co-contributions

Myth
Contributions that come out of my salary or wages before tax has been taken out count towards getting the Super Co-contribution.

Fact
One of the rules for the Super Co-contribution is that you have to make personal contributions and do not claim an income tax deduction for the contribution. Most employees will not be able to claim a deduction for personal contributions they make. From 1 July 2007 the Super Co-contribution is being extended to the self employed.

Tip
You don’t need to wait until the end of the financial year to make one big contribution. You can also make small regular contributions to take advantage of the Super Co-contribution.

Superannuation & Your Tax File Number

From 1 July 2007 super funds or retirement savings accounts without their member's tax file number (TFN's) will be unable to accept personal contributions.

Some people will have received reminders about this from the A.T.O or their fund. If you haven't received a letter yet and are unsure, check your latest member contribution statement to see if your fund has your TFN.

Track Down That Lost Super!

Are you one of the 4.3 million Australians with lost or unclaimed superannuation?

Most of us would have no idea how much super we have lost track of, where it is or how to go about claiming it.

The Australian Taxation Office has a service they call Superseeker.

SuperSeeker is a tool that will look for your lost superannuation in real time and instantly provide you with possible matches.

To begin the Superseeker online search you will need to provide your:

• tax file number


• name, and


• date of birth

It's your money so go and claim it!