Contributing superannuation for children
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Kathy Evans is principal of superannuation & SMSF at Crowe Horwath, an accounting and financial services business. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind.
As we get older we know how important it is to focus on building our superannuation for retirement, but have you ever considered getting your children started on building their superannuation?
The earlier our children start contributing towards building their superannuation, the better off they will be in their retirement.
If your children are under 18 years old and you are looking to help start your children on the road to a comfortable retirement, there are a number of alternatives available.
Let's look at the following scenarios that can impact your child's super savings:
• Your child is employed,
• Your child works in the family business,
• Children claiming a personal deduction,
• Making non-concessional contributions for your children.
If your child is employed
Most people are aware of the superannuation guarantee, where employers are generally obliged to make superannuation guarantee contributions for their employees (noting that exceptions can apply).
However, when it comes to children under 18 who are employed (outside a family business), employers are not necessarily required to make superannuation guarantee contributions if the child only works part-time (less than 30 hours per week).
So what can you do to help your child start building their super?
Consideration could be given to encouraging your child to put some of their after-tax earnings into superannuation. Even as little as $10 per week will help.
Example: Bec, aged 17, is currently in Year 11. On the weekends, she works for six hours for a local retailer. Bec's employer is not obliged to make superannuation guarantee contributions for her, because she is under 18 and working less than 30 hours per week.
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