What I find is a little strange, is the majority of people do not bother to find out what their average rate of tax is, based on their salary.
Currently the low income earners, and part time workers earning less than $18,000 are paying nil tax for the start of the 2012/2013 tax year. Up from a base of $6000 in prior years. Those earning up to $37,000 only pay on average 10% tax,
Yet the compulsory employer super is taxed up front at 15%...and when I say up front, it is taxed at the beginning, before it has a chance to earn any income a difference of 5% extra tax.
Some employees are coerced into making salary sacrifice contributions to add to their super.
They dont get it, that they are paying a premium to their ordinary taxable income
Many people who had to option, and or ability took their super out of their funds when this current labor govnut came to power in late 2007.....their sole reason being, they knew labor would either raid their superfunds, or impose unfair penalty taxes....labor would target them as
The other option if the above was not available was not to make any further contributions to their superfunds....other than the mandatory compulsory employer super
I do not have the problems noted above...since I am self employed....I chose a long time ago not to put my all of my retirement savings into the superfunds.....
I opted to take the risk of paying a higher rate of tax on my earnings, to allow me absolute freedom, as to when and how I would choose to retire.
I have been involved with the taxation of super since its inception, so I understood fully both sides of the equation.
Not everyone, especially the higher income earners, can avoid the highest tax rates on their salaries. But many of them were unaware of other options they had at their disposal to negotiate salary perks etc.
The advice to the highest salary earner was to set up their own self managed superfunds at the earliest convenience, and to educate themselves to manage it themselves, rather than paying the numerous managers that take their cuts annually along the way. I understand not everyone is capable of understanding or managing their investments, let alone self manage a super fund, or running their own businesses. Learning the basics of becoming money wise, and understanding what percentage of tax one is paying on their salary income, can go a long way to becoming savvy regarding their retirement savings. The young ones at high school should be learning the fundamentals, long before they go to university, or get their first jobs.
