Because of indexation, the superannuation contribution caps are set to increase from 1 July 2021 as follows:
- Concessional cap to $27,500 (up from $25,000)
- Non-concessional cap to $110,000 (up from $100,000)
This will give individuals greater capacity to contribute to super and, in doing so, provide for their retirement.
From a taxation standpoint, once the cash is inside your fund, your superannuation earnings (such as rent, dividends, interest etc.) are taxed at the concessional rate of 15%, or are tax-free if your account is in pension mode.
By contrast, those same earnings outside of superannuation are taxed at your marginal tax rate which, for most people, is significantly higher than the super tax rates.
Furthermore, making personal, concessional contributions (e.g. salary sacrifice and after-tax contributions) will in most cases entitle you to a tax deduction.