So you’re in Oz and you have set up your bank account with one on the many banks to choose from and you have heard on the grapevine about a superannuation account? So what is one of these?
Unlike the UK where you pay into either a private pension scheme or hold fire until you’re like 98 years old to gather your state pension Australia has a cheeky system in place to look after their residents. This superannuation account applies to every Australian citizen and anyone who has a valid visa to be living in the country, so if you’re like me and on the popular working holiday visa then you are certainly entitled to this superannuation account.
When you gain employment out in Oz, whether it be picking litter or de-clawing cats, you’re employer has to pay you for your services. They MUST take your tax file number and they MUST tax you accordingly based on how much you earn. Now here is the beauty of the superannuation. Your employer must pay you 9% on anything you earn for as long as your employment with them. So on a typical $4000 month you will have $360 pinged into your superannuation account which is attached to your current account. The kind lady at the bank will set up your superannuation savings account for you in two minutes when you set up your current account; all you have to do is ask.
With this superannuation account the 9% you earn will be untouchable until you reach the Aussie retirement age of somewhere after 60 years old. However, YOU as the visa holder are entitled to every cent of this superannuation account when your visa runs out and you are no longer allowed to live legally in Oz. If you discuss with the bank worker, you can choose from two options of either a fixed rate or variable rate. I have opted for fixed as you never know how unpredictable the market conditions can be. So an example for me would be
Working Holiday Visa
1st year – Worked 4 months and earned $16000 gross – 9% is $1440
2nd year- Worked 3 months and earned $12000 gross – 9% is $1080
I have decided not to stay in Australia as I want to continue travelling so my visa has ended. I can now collect my Superannuation entitlement at the happy sum of $2520
Not too shabby for nothing.
On a side note I’d quickly like to mention how the tax bracket has been raised for all working Australians recently in 2011 from $6000 to $18000. So you can earn TAX FREE up to the sum of $18200. So work away guys and take advantage of this new bracket rise.
Here is the link to check out tax information in more detail
I hope this helps guys and I have covered everything in this rather modest post but it really is that simple. Earn 9% on everything YOU EARN.
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