Superannuation

Superannuation is a valuable and tax-effective system used to accumulate savings over the long term for your retirement. Whilst there have been numerous changes to super over recent years, it is still remains one of the most tax effective means of accumulating wealth and providing income in retirement.

Some of the benefits of superannuation include:

• Earnings are taxed at a maximum of 15%;
• Earnings and capital gains are tax free when in pension phase;
• Personal contributions to superannuation can be tax deductible;
• Employer and salary sacrifice contributions are taxed at 15% which is generally less than personal marginal tax rates; and
• Benefits can also be paid tax free to dependants in the event of death and be an effective estate planning investment.

There are broadly two types of contributions:

• Non-concessional contributions (personal after tax contributions); and
• Concessional contributions which are taxed upon entry into the super system.

Both types of contributions have their own advantages and disadvantages and their application can form the basis of a financial strategy. Because super is designed for retirement there are restrictions on contributions to and withdrawals from super. You can only access your super upon meeting a specific condition of release. Generally this means retirement from the workforce once reaching the preservation age (ranges between 55 60 years depending on your dateof birth), reaching age 65 or through a Transition to Retirement (TTR) strategy. Further information regarding the preservation age as well as other conditions of release is available at www.ato.gov.au/super.

Retirement Income Streams

Once you are nearing or have retired, numerous income stream options are available for you to purchase with your super. Some include:

• Account based pensions
• Annuities
• Transition to Retirement pensions

Each income stream has its own features and advantages and you may use a combination of options to meet your income needs in retirement.

How to get the most from your Super

• Working with your adviser, work out how much you might need to live on in retirement. Then determine
• a long term savings target;
• Start early to get maximum benefits from the effects of compound interest;
• Have regular review meetings with your adviser to keep track of your super and make any necessary adjustments to your investments and strategy.

The above is general advice only - for specific advice relating to your personal situation, please contact us to arrange a meeting. See how we could help put your super strategy in place today. Call us on 07 3172 4748.