The Australian government has just announced the new superannuation rates and thresholds for the 2021-22 financial year.

This means that you’ll get to keep more of your hard-earned dollars as a result. So if you’re one of those people who’s been thinking about joining a transparent and ethical halal super fund, now is probably the time!

Halal means permissible according to Islamic law. This includes compliance with Shariah principles. Investment in unlawful activities such as gambling, prostitution, and alcohol production is prohibited.

Our Halal Superannuation is a type of retirement savings account. There are no investments in riba. This means it cannot earn interest or invest in a way that would violate Islamic law.

Why Is Superannuation Important?

It is important to start saving early in life. Superannuation is an account we set up with our employer where they will contribute a certain amount of money each month. The ATO tax contributions at the time of contribution, but not when you withdraw from it once you retire.

Employer-sponsored superannuation means that our employer needs to contribute to a retirement fund on our behalf.

Employers must contribute at least the same percentage of salary for every employee aged 18 and over, as well as provide super guarantee contributions if they’re not already doing so.

Why Invest in a Halal Super Fund

Financial planning is an important part of life as we all get older.

Superannuation provides a great way to gain tax incentives. And share in Australian investments. This is good not only for our clients but for the Australian economy.

Halal super funds allow people to have enough funds in their retirement years. This is by living within the boundaries set out by Islam and halal principles. We invest our client’s funds into ethical and sustainable ventures and assets.

Our halal superannuation fund is available to both Muslims and non-Muslims. Our clients have the opportunity to see growth in their investment as well as a positive return.

Riba and Gharah

Riba is the Islamic term for interest and usury, which is any excess compensation. It’s found in many forms of transactions but the most common form being lending money at a higher rate than the inflation rate.

Gharar is an Islamic jurisprudential concept which deals with uncertainty in transactions. It comes up when there are unknown factors or principles at play, like if we invest in futures or stocks.

Avoiding Riba and Gharar is crucial not only for Muslims but also for non-Muslims interested in being ethical investors!

Non-Halal Investments

Some investments are not considered Halal. Some examples of these types of investments include stocks, futures, and options. Other examples are investing in alcohol, tobacco, weapons, and gambling.

These investments are Haram, or unlawful.

We recognise it is extremely difficult to avoid riba and gharah in every investment. Where an investment in our super funds has some riba or gharah attached, our profits from that part of our returns are donated to charity, which is using bad money to do good works. The threshold of non-halal returns in any investment is 5%.

How Can We Invest Our Halal Superannuation?

There are other options for how you can invest your halal super with most account providers providing an Islamic investment fund or sharia-compliant balanced funds. The key is that these investments must comply with Shariah principles and this includes compliance with Islamic law.

Investment in unlawful activities such as gambling, prostitution, and alcohol production is prohibited. In all cases, there will be no riba (interest).

There may also be restrictions in certain areas on things like business ventures which don’t meet ethical standards. This means it cannot earn interest or invest in risky or uncertain projects.

Halal Super: An Ethical Investment

Many benefits come with using our Halal superannuation plan.

People can feel more at peace when making financial decisions about their future. Their funds are invested transparently into ethical shares, businesses, and real-world assets.

Our Halal investments are more about the way the investment is earned and what it does to help others in society. For example, a Halal investment could be paying for someone’s education with an understanding that they will repay their loan over time if they can afford to do so at a low enough interest rate.

Halal superannuation funds follow principles that prohibit them from investing in stocks, shares, or futures and limiting investment to property such as land, buildings, and the like. Some also invest in bonds issued by Islamic financial institutions.

Can We Invest in Halal Super

Our Halal Super is a great way to ensure your hard-earned money does not fund anything prohibited under Sharia Law. You can now choose between an investment that fulfills the five pillars of Islam.

Anyone entitled to hold an Australian superannuation plan may invest with us. We are

Making Our Money Matter

Many superannuation funds link to the stock market and invest in companies that produce things like tobacco, alcohol, and gambling.

We all know that these industries don’t have a good track record when it comes to sustainability or ethics. Investing your money in them is risky because they might not be around for much longer.

Our halal superannuation invests only in sustainable, well-managed companies. You can feel good about investing your hard-earned money into them.

You’ll sleep better knowing your retirement savings aren’t going towards something harmful or unethical.

Why Halal Superannuation Works

A halal investment is great for Australian Muslims.

What to look for in a halal superannuation fund?

Our investments are capped based on Sharia law and have more transparent investing options available. Instead of the sneaky secrecy that many banks have when it comes to their investments.

Crescent Wealth is an innovator in service. We look after the best interests of all our customers no matter who we serve.

We’re passionate about customer satisfaction. And we’re committed to adhering to ethical principles. Including fairness and generosity towards relatives or friends, honesty with coworkers, and kindness towards strangers. Islamic values rule the roost here!

What to Look For in a Super Plan

Superannuation tax provisions can mean paying less tax in a financial year. This depends on how much an individual earns before they deposit or withdraw from their account.

People who earn more than a certain threshold will pay fewer income taxes by putting money into their super fund because they’ll already have been taxed on this amount.

The Australian Taxation Office (ATO) defines many different thresholds with higher amounts for people aged 60 years of age or over;

It’s important not to make withdrawals too soon as these may still incur a 15% penalty charge even if all earnings within the investment are tax-free.

If you are 65 years of age or over and have retired, then you need to start thinking about your retirement income needs.

Considering the various thresholds will help people make an informed decision on when they can withdraw their superannuation benefits after they retire.

The last is how much money you earn per year:

Some employers offer a “salary sacrifice” for employees to reduce taxable income. Employees agree not to receive part of their pay as cash wages but instead depositing it into their super fund account.

This type of arrangement might be advantageous if the individual’s marginal rate exceeds 15%.

The maximum salary sacrifice limit (combined with any other concessional contributions) cannot exceed $25,000 (https://moneysmart.gov.au/grow-your-super/super-contributions)

Changes to Superannuation for 2021-22

The Australian Tax Office has released key superannuation rates and thresholds for 2021-22.

We recognise that superannuation is a complex subject and can be difficult to understand at times, but the essence of these changes is to give you, our clients a better future and more stable financial wellbeing in your retirement.

The Australian Tax Office (ATO) has said from the 1st July 2021, people earning less than $450 per month will be eligible to receive employer contributions to a super plan for the first time

Some of the key changes effective 1st July 2021 are shown below.

Super Guarantee Percentage

This is the minimum percentage your employer must contribute to your superannuation. As of 1st July 2021, the super guarantee percentage moves up from 9.5% to 10% of your earnings (ATO 2021), which means that employers will need to contribute more.

The $450 per month threshold is abolished from 1st July 2021 so all eligible employees will be entitled to the 10% super guarantee from their employer.

This will mean many more people will have access to employer contributions, which is a good thing

Concessional Contributions

These are additional contributions paid by our employer. They include the employer’s super guarantee payment, contributions detailed under award agreements, and additional pre-tax contributions paid by the employer over and above your super guarantee.

Because concessional contributions are not taxed at source, they are taxed at a rate of 15% up to the concessional contributions cap which becomes $27,500. (ATO 2021)

These tax provisions apply to our concessional contributions, which can be used as a deduction when calculating the amount of tax payable in that year.

Non-Concessional Contributions

Non-Concessional Contributions include personal contributions made from tax-paid income, spouse contributions, and any concessional contributions above the concessional contribution cap.

These contributions are not taxed.

the non-concessional contributions cap is $110,000. (ATO 2021)

Capital Gain Tax

The Capital Gains Tax cap amount for a non-concessional contributions tax incentive is $1.615 million. (ATO 2021)

This means we can invest up to $1.615 million into our superannuation fund from the sale of small business assets without having to pay capital gains tax.

Div 293 Tax

Div 293 tax is an additional tax on super contributions. It reduces the tax concession where combined income and contributions are greater than the Division 293 threshold.

The Div 293 tax threshold amount for the 2021-22 financial year is $250,000. (ATO 2021) Any combined income and contributions in this financial year above $250,000 will attract additional tax.

Maximum Super Contribution Base

Employers are not required to meet the 10% super guarantee for employee earnings above the maximum super contribution base. For 2021-22, the maximum super contribution base is $58,920 per quarter. (ATO 2021)

Superannuation Co-Contribution Entitlement

The maximum superannuation co-contribution entitlement remains at $500. Low and middle-income earners who make personal after-tax contributions to their super fund may qualify for matching Government contributions up to a maximum of $500. (ATO 2021)

Income Thresholds

The lower-income threshold increases to $41,112 and the higher-income threshold increases to $56,112. (ATO 2021)

Low Rate Cap

The low-rate cap amount is $225,000 (ATO 2021). This is the lifetime amount that people who are entitled to draw funds from their super account but are still under the age of 60 with reduced or nil tax rates.

General Transfer Balance

The general transfer balance cap is $1.7 million (ATO 2021). This is how much money a person can transfer from their accumulation account to their retirement phase account tax-free.

Defined Benefit Income Cap

The defined benefit income cap is $106,250 (ATO 2021). Any superannuation income a person receives above this cap is partially taxed, even if that income was no-taxable previously.

What To Consider In a Super Fund

Here are a few things to consider when thinking about your future and retirement income:

Do we want an ethical investment option?
Which age pension will we be eligible for
What are the implications of that income on our retirement strategy?
What factors should we take into account when deciding how much to put in superannuation as a percentage of our salary?
The narrowing gap between men’s and women’s final salaries

Taking Stock

Australian superannuation is changing. More people are eligible for employer-funded super. And people are seeking advice on how to make the most of their super.

However, at the end of the day, there are two key questions when deciding which super plan to choose. Does our super plan align with our beliefs? And will our super plan help provide the retirement we want? Making sure your super plan aligns with your answers to these questions will give you peace of mind knowing your super is in safe hands.

Looking for a better way to invest money? Halal superannuation is one of the best options. It’s an ethical investment, and it makes a positive difference in the world around us. Contact us to make the switch to Halal Super.

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Islamic Money Expert

Fatma currently leads Crescent Wealth’s Operations, including strategic business planning, project management of major projects and management of key stakeholders.

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