Superannuation has been specifically designed and endorsed by the Federal Government as the preferred way to save for your retirement, and has added tax benefits that make it particularly attractive.
Why Invest in Superannuation?
Superannuation can be a tax effective way of building wealth for your retirement. The tax rates imposed on superannuation funds are as follows:
Contributions Tax is a maximum of 15%.
Investment income is taxed at a maximum of 15%.
Capital Gains are taxed at a maximum of 15%. If the asset has been owned by the superannuation fund for more than 12 months the maximum rate of capital gains tax is 10%.
When an income stream is commenced upon retirement, the tax rate imposed on income and capital gains in the pension account is reduced to zero.
Pension payments are also tax free for those aged over 60.
For those aged between 55 and 60, pension payments (less any tax free amount) will be taxable and receive a 15% tax offset.
These superannuation tax rates are in contrast to your personal marginal tax rate, which could be considerably higher. We can provide you with further information in relation to personal tax rates.
Types of Superannuation Contributions
Contributions to the superannuation system are split into two broad groups, concessional contributions and non-concessional contributions. Limits apply to the amount of contributions (both concessional and non-concessional). We can explain more about the types of contributions that fall into this category and the limits that apply to you.
Taxation of Superannuation Withdrawals
Depending on the classification of your superannuation benefits, you may be able to withdraw (cash out) part of your superannuation benefits. When you withdraw funds from superannuation, you may incur lump sum tax, depending on your age at the time of the withdrawal, the total amount withdrawn, and the superannuation component from which the funds are taken.
Outlined below is the tax treatment of superannuation withdrawals, based on an individual's age at the time of withdrawal and in some cases the total amount withdrawn and superannuation component.
Withdrawals Over Age 60
For individuals aged 60 and over, superannuation withdrawals made from taxed superannuation funds are tax-free and are non-assessable, non-exempt income.
Withdrawals Under Age 60
Depending on your personal circumstances and the components that make up your superannuation benefit, tax may be payable.
Some super strategies we could use include:
- Salary sacrifice (pre-tax) contributions
- Personal contributions
- Government co-contribution
- Spouse contributions
Putting in place strategies to make your super grow will help you have a more comfortable retirement. We will assist you to make the right decisions and to stay on track.
Self Managed Superannuation Funds (SMSF)
A SMSF is a special trust fund that has been set up for 1-4 people who are usually family members. As members you become trustees/directors of the fund and you have greater control over the choice of where and when to invest and how the fund operates.
Some advantages of a SMSF over a Retail Fund?
- Greater control over your investment decisions – you have absolute discretion on where and how to invest
- Access to a larger range of investment options and strategies
- Flexible pension options to suit your lifestyle
- Potentially lower rates of tax – due to greater flexibility to control assets and use imputation credits
- Flexibility to choose investment strategies suitable to changing market movements
- Allows the transfer of personally owned shares and other listed securities directly into your fund
Borrow inside your SMSF to acquire property.
Starting up an SMSF is not a decision that can be made in a hurry. All the ins and outs need to be investigated thoroughly so you can weigh up the benefits and obligations. Whether or not you should establish an SMSF depends on your particular circumstances. The best place to start is to speak to us and we can explore how you can take control of your Superannuation and retirement savings today. All Round Financial Services can make the setup and ongoing management of your SMSF easy.
All Round Financial Services helps you define then transform your goals into a secure reality that allows you to realise your ambitions. Contact us.