Super & Tax
There are various tax-minimising strategies available to anyone with a superannuation account in either external super or a SMSF. These include:
- Salary sacrifice into super
- Contributing into super from after-tax dollars to receive the Government co-contribution
Transition to Retirement (TTR) is the most tax-effective strategy in the superannuation arsenal. It involves:
- Salary-sacrificing into super up to the age-based limit; and
- drawing a pension from superannuation at the same time.
It has huge tax-saving consequences for any eligible fund members.
There is a case study at the right that looks at this in further detail to illustrate the benefits of this strategy.
John, a bank worker aged 55, implemented a transition to retirement (TTR) strategy with his super. He arranged to salary sacrifice an extra $30,000 per year into his super fund and at the same time commenced drawing a pension from his super so that he still had the same level of income at his disposal each pay.
This had the effect of both reducing his tax rate on the $30,000 salary sacrificed into super – saving $2,500 per year – and reducing the tax his super fund paid on its investment earnings (interest, dividends etc.) by $5,000 each year. Upon retiring at 62, his superannuation account balance had been boosted by $52,500 in these additional tax savings.
Please note the tax savings will vary for clients based on their individual circumstances and income levels.
It is vital to seek expert advice before commencing any tax minimisation strategies.
- September BAS due 25/11/13 if lodged by our firm.
- Individuals only have until 31 October to lodge 2013 tax returns if they don’t see a tax agent.
- Superannuation guarantee charge now 9.25% from 1 July 2013.