With tax time just around the corner, RateCity shows you that claiming your lost superannuation can help you get a bigger tax return and make the most from your savings.
June 28, 2010
Most of us have accumulated more than one superannuation account as we have changed jobs, changed home addresses and even changed our names, so along the way our super accounts lose track of us and us of them.
As a result, at the end of June 2009, the value of lost super in Australia was worth $13.6 billion, which was up $700 million from June 30, 2008, despite a decrease in lost members, Australia Taxation Office (ATO) figures indicate.
This equates to approximately one in every two working Australians have an unclaimed super account, Australia's unclaimed super fund AUSfund says.
How can you claim your share?
The ATO has set up SuperSeeker, which is a site dedicated to finding your lost and unclaimed super. This search tool is able to find a majority of your lost super accounts so you can then consolidate all accounts into one main account. By doing this, not only will you save on potential administration fees but it makes it easier for you to track and manage your money in the future.
For super accounts with a balance of less than $200, the superannuation law allows you to withdraw the funds upon terminating your employment or membership, or you can roll it over into your main super account. Be aware that that you may have to pay tax if you withdraw the money.
For superannuation accounts with a balance of less than $1000, special rules apply concerning the level of administration fees that are deducted from your account, so it's best to contact your fund or seek professional advice.
In addition to your employer's contributions you can make your own contributions through salary sacrificing. How it works is that you receive less in your pay but your employer contributes that amount to your super. Because this amount is from your gross salary you save on paying tax.
You may also be eligible for the federal government's co-contribution, where if you make a further contribution the government will match it, tax free. All these tax savings will mean that you may receive a larger tax return, so what should you do with this money?
Earn more with an online savings account
If you were to deposit your tax return into an online savings account you can earn a higher rate of interest than leaving it in your transaction account, and increase your savings faster over time. This is extremely beneficial if you have a goal in mind that you want to reach, such as a deposit for a home loan or a holiday overseas.
There are a range of online savings accounts available that offer high interest rates, such as UBank's USaver at 6.42 percent, or RaboDirect's High Interest Savings Account which is currently at 6.40 percent. For example by depositing your tax return worth, let's say $3000, into this account and deposit $200 into the account each month for 12 months you can save $5400 and potentially earn more than $270 worth of interest at a rate of 6.42 percent.
So claim your lost super to save in tax and open up an online savings account to deposit your tax return into and reach your savings goals sooner.