What is the Superannuation Guarantee (SG)?
In the world of Superannuation, there are many common terms that are used, many of which most people have no idea what they mean. In this article, we will be discussing the ‘Superannuation Guarantee (SG)’ which will cover some things you should know.
In Simple Terms:
The Superannuation Guarantee (SG) is a compulsory contribution that your employer is required to pay into your Superannuation Fund, on your behalf. They are required to make this contribution by law which is an extremely beneficial feature of retirement saving with Superannuation Funds.
As it stands, the rate of Superannuation Guarantee contributions is 9.5% of your annual salary which is usually split into quarterly payments. The contributions that you receive are part of your remuneration package and they are normally paid on top of your salary. SG payments are set to increase to 10% on 1 July 2021.
In order to be eligible for SG payments, you must be at least 18 years of age and earn a minimum of $450 per month (before tax).
How are Superannuation Guarantee Payments Taxed?
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These contributions are classed as ‘Concessional’ contributions meaning that they are ‘before tax’ contributions. Upon entry into your Superannuation fund, they will be taxed at 15% if you earn below $250,000. If you earn more than this, tax at 30% will be applied. For more information on the tax treatment of retail super funds, check out our article Retail Super Funds – The 3 Stages of Tax.
If you have any questions about SG or general superannuation enquiries, contact us today and a member of our team would be happy to answer any questions you may have.
This article does not contain personal or financial advice. It is provided for general information only and does not take into account your personal objectives, financial situation or needs. IVCM is not authorized to provide you with any personal or financial advice.
If you require financial any advice then you must make sure that you obtain advice from a suitably qualified financial adviser.