Please note: This section is provided for general information purposes only and should not be regarded as advice in any form. Superannuation advice should be sought from a suitably qualified and regulated financial planner authorised to provide you with advice.
Superannuation, known as super, is money set aside for your retirement. If you are an employee, you are usually entitled to compulsory super contributions from your employer, even if you are a temporary resident of Australia. From 1 July 2014, these super guarantee contributions must be at least 9.5% of your ordinary earnings (what you earn for your ordinary hours of work including over-award payments, commissions, certain paid leave, bonus payments and allowances), up to the ‘maximum contribution base’. This payment is in addition to your salary and is paid into your choice of fund or your employer’s recommended of fund if you haven’t chosen one.
In addition to the contribution that your employer makes to your superannuation, you can also make additional contributions from your pre-tax pay by entering into a salary sacrifice arrangement with your employer. This could effectively reduce your taxable income and at the same time help to boost your superannuation. This personal contribution is referred to by the Australian Taxation Office (ATO) as a concessional contribution. There are limits for concessional contributions which may vary each financial year (check the ATO website for most up to date information). The tax deducted is 15% for contributions below the concessional cap, and (currently) 47% for contributions that are over the concessional cap.
Which super fund?
There are a number of super funds in Australia and here is a few that caters to people in the healthcare and medical professions:
These websites may be helpful if you need more information on how to choose a super fund”
Self Managed Super Fund
Self-managed super funds (SMSFs) are a way of saving for your retirement, where the members of the SMSF run the fund and are responsible for complying with the super and tax laws. Members make their own investment choices for their retirement rather than leave their superannuation to be invested by others. There is no minimum amount required to setup a SMSF.
SMSF can have a maximum of four members. All members are either individual trustees or directors of a corporate trustee of the fund. This means all members are involved in managing the SMSF.
If you set up a self-managed super fund (SMSF), you’re in charge:
- You are held responsible for complying with the super and tax laws. Failure to operate your fund within the law may face you with severe penalties and tax consequences,.
- You make investment decisions for the SMSF, including formulating an investment strategy that you review regularly. You’ll need to understand the restrictions on the investments an SMSF can make.
- You need to have the time and skills to manage your SMSF, and there are ongoing running costs. It costs money to set up and run an SMSF. You might find that the fees you pay for an SMSF are more than you would pay in another type of super fund, so you may want to ensure that the benefits you will get out of going the SMSF way is worth the potential extra cost.
Every year that you have an SMSF you’ll need to pay for an independent audit and the supervisory levy. Most SMSFs also pay for preparation of SMSF annual return, valuations of the SMSF’s assets, actuarial certificates for SMSFs paying income streams (pensions), financial advice, legal fees, assistance with fund administration, and insurance for members.
It may seem that the requirements to run an SMSF are complicated and indeed they could be. There are however a number of companies that offer services to simplify these requirements for you. They provide tools and services you need to run your SMSF all under one roof and they also attend to all the annual compliance requirements for your SMSF so that you do not have to appoint separate accountant and auditor. Costs vary between providers so shop around.
Transferring your pension to Australia
If you arrive in Australia on a permanent residence visa and intend to stay in Australia permanently, you may want to consider transferring your overseas pension to Australia. If you want to do so, be aware that you have 6 months (from your arrival date if you hold a permanent residence visa, or from the date you acquire permanent residence if you arrived on a temporary residence visa) to get your international financial affairs in order without incurring Australian tax liabilities. If you miss the six month period, you may be liable for Australian tax on any growth of the value of your fund between the date you became a permanent resident and the date you transfer your pension.
Most funds do not allow access to non-concessional contributions until you reach retirement age so only transfer your overseas pension if you do intend to stay here permanently.
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Sterling Healthcare Resourcing
The content of this website is written and owned by Sterling Healthcare Resourcing Pty Ltd, an Australian-owned healthcare recruitment agency which specialises in permanent and locum job placements of Australian and international doctors. This website contains information that serves as a general guide to living and working in Australia.