Superannuation and Tax planning

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Reproduced with permission.

Last issues newsletter topics on tax planning created a myriad of questions from clients and investors alike.

We thought it prudent to highlight the benefits of Superannuation with Tax planning.

Superannuation represents an effective tax planning opportunity for most investors. Whether you are an employee or self-employed, the tax benefits of investing surplus funds into super are exciting.

What are the benefits?
• Earnings tax of 15% instead of up to 46.5%, saving you up to 31.5%.

• Contributions tax of 15% instead of up to 46.5%, saving you up to 31.5%.

• Capital gains tax discounts apply to assets held for longer than 12 months. In super the effective tax rate is 10% instead of 23.25% for investors in the 46.5% tax rate, saving you up to 13.5%.

• Self Managed Super Funds allow similar flexibility to investing as an individual. This includes ultimate control of your assets & investment decisions. Stay in cash if you like.

• Life & Disability insurances can be run tax effectively through super where your beneficiaries are de-pendants. In the event of a claim, payment can be more flexible as you are the trustee

• Borrow to buy property in your SMSF. When selling the property in the retirement phase, there is no CGT on the proceeds. Nor is there any tax on income for properties held into retirement.

• Buy and then rent your own business premises back to your SMSF. This not only gives you a secure tenant (nudge) but also boosts the receipts of your fund!

• Transition to Retirement access from age 55 onwards. This strategy means you will incur no tax on earnings, even before you are retired.

• Tax free drawings from super on retirement at age 60 and above.

• Enjoy full protection from creditors on all super assets.

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