Super can become your legal tax dodge

Bruce Brammall, The West Australian, 12 March, 2018

Teen with piggy bank

Young people say some naïve, stupid stuff sometimes. They also do stupid stuff, think stupid stuff and stress about stupid stuff.

Not all the time. (And we older types aren’t immune to acts of stupidity.)

When we see or hear youngsters doing stupid stuff and call it out, they get upset because, apparently, we “don’t understand”.

But we really only get to hear or witness a very small proportion of what they’re actually saying, doing or thinking. In all probability, we’re only witnessing a tiny percentage of all their dumb thoughts and actions. The reasonable conclusion to draw from this is that they’re probably way more stupid than we’re actually giving them credit for.

This was reinforced with me recently as I pondered a quote from a young-ish lass in a newspaper.

The 24-year-old said: “Good on me for picking a profession where you don’t get superannuation”.


Okay, this young lady is a struggling street artist. Yes, I’m sure she doesn’t get paid particularly well for her devotion to her passion. And what she doesn’t earn from her chosen profession might well be topped up with government payments. And that’s fine.

But it’s a standout attitude that tends to afflict vast numbers of young people and their superannuation. And that is: “Who cares about superannuation? It’s nothing now and I don’t trust the government to ensure that it’s nothing later.”

Your superannuation is, largely, about your choices. How much you do or don’t care about your superannuation is a choice. How much you put into superannuation is also largely a choice. And ditto for what your super is invested in.

Sure, if you’re an employee, your boss whacks 9.5 per cent of your salary into your super. If you’re not an employee, well, you have a choice as to whether or not you contribute to your own super.

Contributing to your own super fund became even easier on 1 July last year. Now anyone, employee or not, can put money into super at any time of the financial year and get a tax deduction.

Australia’s “youth” has some super stupid attitudes to their retirements that need to change. The young woman in question was saying that she’ll probably end up being the old woman who lived in a shoe.

If that’s what she’s set her sights on …

Understand this: Your superannuation, in fact your whole retirement lifestyle, is not about what others do, or put into, your super fund.

It’s largely about choices that you make, as an individual.

Your lifestyle in retirement is totally yours. Your superannuation is yours (you just can’t get your paws on it yet). You can make your super do almost anything. But you have to take ownership. You have to make some choices. You’ll need to make some sacrifices – sometimes that’s just sacrificing some of your time to investigate then make choices about what you’re invested in.

Why should the young care about super? And why do older Australians tend to care about it so much?

Because it’s a tax dodge! A legal one. Your super fund is about saving for your retirement, while paying less tax along the way, at every stage of the superannuation cycle.

Superannuation is taxed at a maximum of 15 per cent. Your contributions are only taxed at 15 per cent (though for low-income earners, it’s effectively taxed at 0 per cent, thanks to the low income superannuation tax offset, known as LISTO). Super fund earnings are taxed at a maximum of 15 per cent.

Compare this to what you earn normally. That is taxed at up to 47 per cent. If you earn $37,000 a year or more, any extra dollar you earn will be taxed at a minimum of 34.5 per cent.

What Australia’s “youth” needs to understand about superannuation is pretty simple.

It’s your money.

You need to treat it like it is. You need to take care of it. Give it a cuddle occasionally. You need to make small decisions about how it’s invested (hint: as aggressively as you can stand, while you’re young). You need to make contributions to it, over and above what your employer is, or isn’t.

If you want to be the old woman living in a shoe, fine. But don’t blame anyone else for a retirement spent eating tinned dog food.

Take control of your own little tax haven.

Bruce Brammall is the author of Mortgages Made Easy and is both a financial advisor and mortgage broker. E:

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