Bonus season provides the perfect time for planners and investors to be proactive topping up superannuation contributions and reap the accompanying tax benefits, according to ING.
According to ING technical services manager Andrew Lowe, with bonus season virtually upon us the new super regime makes it the most tax-effective structure to invest for the long term.
"If a bonus is paid as a pre-tax salary sacrifice into superannuation it will reduce the effective tax payable on that money from someone's top marginal rate to just 15 per cent," Lowe said.
"Better still, when the money is in super any investment earnings are only taxed at 15 per cent or often less because of franking credits, and the money can be withdrawn tax-free after age 60."
However, for the lower tax rate to be implemented an employee must give notice to their employer that they wish to place the bonus in super before it is announced; otherwise top marginal rate will be applied.
"Just make sure you do it before you sit down with your boss and they tell you what you're getting," Lowe said.
