Anything and Everything about Superannuation

Varies with age. We do see more in their 50s and early 60s wanting to do more because they suddenly realise their super needs to be more in the same time period when they also have more disposable income. Then they realise that selling assets is limited by caps. And a cap on concessional.

 

Retired regulatory affairs Expert. Now 53 and Kinder teacher. Current country China. I pay about 25K a year to super. And about 25K a year to pay down mortgages. Will then sell up and dump into super according to the concessional cap on one. And in tranches for the other. Then I will continue to work and use my super for top up if I need more fun money. I work full time here but I don't work much as I'm always on paid holidays we get an unbelievable amount of paid leave and it gets too boring travelling 15 weeks a year on holidays. I maybe will change jobs and cut back later to 20hours a week working as an adjunct prof in a uni somewhere with all the benefits. That's one case study for you ;-)

 

Whether there'll be more tweaking who concessionally taxed vs untaxed, we'll need to wait and see but the limits will need to be adjusted.

 

I've been doing it since sometime in my 30's...

 

People forget that Super Guarantee only started in 1992. For people like me I only built up my super from the age of 42 - nothing in the period 18 - 41 and far less compounding due to the shorter time frame. Also contribution rates started at 3% and rose slowly to 9% in 2002. The tax free treatment reduces the need for us oldies to suck on the public teat of the oap. I have no problem with the tax free treatment being wound back starting in 5 years or so.

 

But we're doing so @Mark F . Subsided pharmaceuticals for a start. The funds for the subsidy have to come from somewhere. Betaferon for MS is about $2k per script.

Edit: As to the start of superannuation, no problem with people applying the legislation to their benefit. However, many but granted not everyone had the opportunity to invest before its advent. They didn't and a seemingly large portion now whine it's all so tough and they are hard done by. As you may gather I'm not impressed with a few of my generation. I try not to associate with some of the parasites and obviously them with me.

 

Yes very true. And not all people have maintained continual jobs with super too eg sole traders and self employed, unemployed periods, people with chronic illness and disabilities etc Approx 72% of covered by SGC at any time. and that can vary. Pre 1992 50% or so of employees were actually covered for super....but most were crappy defined benefit funds who would vest to the employer if the employee left. terrible policy. And female workers taking family time all affect super. Super and age pensions are meant to both be available. Age pension is the safety net. I see many people aspire to receive a age pension. Others are terrified of relying on an age pension. Its like aspiring to a good well paid job or the dole. You wont get far on social security and the public purse.

My other complaint is employer theft of unpaid super. Its a crime that goes unpunished.

Good chronology of super laws and changes from 1900 here :
Chronology of superannuation and retirement income in Australia – Parliament of Australia

If we look back what everyone says about how complex and how super is taxed actually is old news. Go back to 1915 and its same as today !! What really made a mess of super was Chifleys efforts in 1945 and promises to use pensions instead of super. Nobody could fund it but they started the lie. So by 1970's super was unpopular but the promise of pensions was a lie.

 

No it isnt.

 

Any expat with a rental property in Australia that is cash flow positive should consider putting extra money into super. Non-residents pay 32.5% tax from the first $, but super contributions are taxed at 15%. You need to consider the tax rules of the country where you are tax resident and any DTA between Australia and that country: for me I would normally have to pay a flat rate of 30% on capital income, however as I got credit for the 15% paid in Australia and that the depreciation allowances in my tax residency are much higher than in Australia the net effect was that there was no more to pay on top of the 15% super contributions tax.
So in summary expats could have a strong incentive to put extra money into super...

 

Awesome post. Ta muchly

 

I'm an expat too and have recently sold our former PPOR in Australia. It's an easy option just to put into super - using the bring forward rule my wife & I could put $600k into super. This would be a good option if you were certain you would retire in Australia.
But if you didn't retire in Australia, what happens when you take money out of super? Assume you have retired, and are aged 60 - 65, and have moved your super to pension phase. The minimum draw down is 4%. If you were living in Australia this would be tax free, however many countries regard this as normal taxable income, so suddenly your tax-free withdrawals would be taxed at maybe 25 - 30% Ouch!
If your plan is to retire in Europe, would a mutual fund in an EU country be a better option? In several EU countries mutual funds are tax free entities, meaning that the earnings are compounding without tax. When you withdraw, the increase in value is subject to capital taxation. This would be a much better option than Super, which is taxed at 15% in accumulation phase, and then possibly taxed again upon withdrawal.

 

Just little ole me. I have zero reasons to be in Australia. Just two properties there. Owch governments everywhere and their sticky tax fingers. Maybe I will just continue to be a gypsy and country hop every few years. Or go live in Georgia ha ha. Thanks for the very sophisticated post on all. I feel sad now.

 

Yes it is

Transitioning out of work | First State Super

 

Your preservation age could have been 55. You can then draw down payments to substitute your wage if you reduce your working hours, drawing down a maximum of 180k per annum from memory.

 

Don't feel sad! As with every investment you need to consider your exit strategy from that investment, be it an IP, shares, super or whatever. One option is to move back to Australia for 6+ months after retirement, become a tax resident, sell your IPs and withdraw all your super tax free! Then start again with a blank sheet of paper, cash in the bank and go wherever you want!

 

omg no..... Go to a country just for that....But thanks so much for this post. You have saved me a fortune in expert advice I think. What is retirement? Do you mean after the age of 60 when I can start accessing my super? I'm a stupidly young 53 year old. Yes that's me not a fake photo. I want to still keep working full time at 60 or I will die of boredom. I have a very easy expat life working full time as a kindy teacher ;-)

 

My earlier comment was that individuals born after 1 July 1964 can only access super once they turn 60. Someone states this is incorrect so I provided to link to substantiate.

I wish I could access super now as I would use most of it to pay down my mortgage. Instead I have to wait until I’m 59 due to when I was born.

 

Yes it does sound extreme to change countries just to save some tax! But at the same time it's good to know the financial impact of different options. You can access super at age 60 and have retired from a job. There is nothing stopping you starting to work again...

 

When you sell some IPs, buy a house in Georgia on the Black Sea and a little boat.
You start your own little local business helping out the community and teaching English.

Is that worth 6mths in aweful Aussie?

 

Doh! Thank you so much!! Stop by any time. You really helped a gal out