Calculation of Assets and Income

Discussion in 'Superannuation, SMSF & Personal Insurance' started by crocodile, 30th Mar, 2021.

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  1. crocodile

    crocodile Member

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    Hi everyone,
    I hope I've come to the right spot. I'm 64 and plan to retire at 67 and 8 months ( when my wife turns 60 ). I'm having a bit of trouble interpreting the government web page dealing with assets and income etc.

    I expect to have around 450k super balance at retirement. My understanding ( and I may be wrong ) is that I may be entitled to a part pension as I will be under the $880,500 asset ceiling. I understand the reduction in pension due to asset value. Is that the end of it or am I subject to further reductions due to deeming. Also, are the withdrawals from the fund counted as income for the income test. I'm not sure as it seems like a double dip to have a reduction on both assets and income at the same time.

    My wife doesn't intend to make withdrawals from her super until of pensionable age. I get that the two funds will add together for the asset test at that time.

    Thanks for this resource.
     
  2. Anne11

    Anne11 Well-Known Member

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  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The deeming calculation applies to the minimum pension MINUS any tax free element. It may be wise to seek financial advice on recontribution strategies before its too late. This may be limited due to caps. However if you withdraw and she contributes it may wash some of the tax element so it is tax free. And excluded from deeming.
     
  4. crocodile

    crocodile Member

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    Thanks Anne, I've used a number of calculators but unfortunately they seem to only give a figure without telling how it was reached. I also find that many give different answers for the same input. Not surprised by that due to changing caps and rules over time.
     
  5. crocodile

    crocodile Member

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    Thanks Paul, your fast response is appreciated. My wife will stop work at 60 and not make contributions due to no income. She won't be of pensionable age so we intend to live off of mine until she reaches 67.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    You are not getting it ! The ages prior to retirement is when smart people re-engineer their super and when one member is older than the other it opens some choices. You can convert deemed assets into non-deemed assets and it may increase your pension access. On death it also may save adult kids 17% tax.
     
  7. Anne11

    Anne11 Well-Known Member

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    So what you tried to say is (not advice of course) that he could withdraw $300k from his super and contribute to his wife super as after tax, hence serving two purposes:
    1. Higher pension income due to less asset in his super.
    2. Turn the $300k which the majority would be before tax and convert that into after tax contribution to avoid : his wife pension deeming calculation and paying dearth tax at 17% .

    This is clever if so, hence it makes sense to pay for professional advice to maximise benefits.

    thanks Paul
     
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  8. crocodile

    crocodile Member

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    I think between your good self and Anne I get what you're saying. Very good. I'll put this to my financial planner when I next speak.

    The original query was in a nutshell, is the money I withdraw from super counted as income for the purposes of assessing a part pension. I wonder because it seems part of the asset test as well as deeming rules. Don't know if you get stung three times. I can ask the financial planner but it just seemed a bit trivial to bother him. Given the importance, maybe not so trivial.

    Thanks for your other information. Handy to know.
     
  9. AndrewM

    AndrewM Well-Known Member

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    Income you draw from the pension wouldn't increase your assessable income as account based pensions are now deemed. Only old 'grandfathered' pensions have this implication as they don't come under the deeming rules.
     
  10. crocodile

    crocodile Member

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    Thank you Andrew. That's very helpful.

    Regards.
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    There is no knowledge of a pension that meets that exemption. And when a recontribution strategy is used it may or may not b a issue
     

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