Superannuation for Beginners

Discussion in 'Superannuation, SMSF & Personal Insurance' started by skater, 14th Feb, 2022.

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  1. skater

    skater Well-Known Member

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    Yes. Some also from certain members as well, although most of the regulars are good, and I don't mind the humour that comes up either. It's just the annoying one or two. (not you)

    Thankyou again.
     
  2. skater

    skater Well-Known Member

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    Thankyou, although some assumptions are incorrect. I am 60. Hubby is a toy boy. :D Not selling current PPOR, however previous PPOR I'm contemplating my options.
     
  3. kierank

    kierank Well-Known Member

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    Yep, direct shares in SMSF
     
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  4. Perky29

    Perky29 Well-Known Member

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    This is kind of similar to what we are going to do. Hoping to have around 600k in our SMSF in high yielding shares come 2027 or 2028 (after the crash I hope!). Imputation credits are the icing on the cake if they are still around.
     
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  5. sash

    sash Well-Known Member

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    Good synopsis of how tax effective super can be

    Trick to save $2658 tax every month

    Note the super limit for tax free amount via indexation is going to 1.7m. So assuming a 4% withdrawal rate can have 136k tax free. Which is equivalent of almost 200k pre-tax.

    Enough to keep everyone in bickies for a while....
     
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  6. jaydee

    jaydee Well-Known Member

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    I've just shown a simple example where a couple can have assets of $7M and still one member of the couple can still get the full pension.

    The same scenario could apply for an even higher level of assets.

    I'm not saying it is moral, but it is possible and perfectly legitimate.
     
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  7. Millie

    Millie Well-Known Member

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    I read that article recently, and thought it was written in simple terms and thought of @skater and her request for info.
     
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  8. RENI99

    RENI99 Well-Known Member

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    Currently the 330K bring forward is limited if your Transfer Super Balance (TSB) is over 1.48M. from 1.48M to 1.59 its 220K (under bring forward) from 1.59 to 1.69M its 110K
    Downsizing 300K is not limited by anything except your age and owning for 10 years plus has been your main residence at some point.
    Concessional catchup is limited to having TSB under 500K.
    And agree it is something that requires professionals to advise on as can be complicated.
     
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  9. Tonibell

    Tonibell Well-Known Member

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    No work test for under 67 - so you can use the concessional cap to reduce tax on property earnings (I think).
     
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  10. See Change

    See Change Well-Known Member

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    Hi Skater

    We have our investments in super / Personal and trust to spread the risk , but it's all in property at this stage .

    Big advantage of super is tax , ie potentially none .

    We're currently thinking of selling something privately and putting a lump sum into super so we can buy another in our super .

    With two of you , you could potentially put up to 660 K into super . basically 110 k / year for each of you and you can pay that three years in advance .

    One option available.

    We have an LOC available so we could put in more money at this stage ( but personally the money is borrowed so not tax deductable ) and then when we sell in the next year or two , pay down the money we borrowed personally via the LOC . Effectively bringing forward the money we're putting into the super .

    Our second NDIS we're doing is in our super , so the income from that will be tax free in our retirement . To build something in your super , you can't borrow , so you have to have the cash to do it .

    We are going to start putting extra money we get into shares or funds , but we've done well with property so happy to still go that way at the moment but wll shift in the nextr couple of years

    Cliff
     
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  11. skater

    skater Well-Known Member

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    What happens to funds in Super when you die? I know you can direct who the funds go to, but does the Government take a chunk? AND....does it get added to the Super of the Beneficiary, or go to them personally, like any other inheritance?
     
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  12. SatayKing

    SatayKing Well-Known Member

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    Short answer is Yep - the Government can take a chunk.

    Tax on benefits

    "If you're not a dependant of the deceased, you can only receive the benefit as a lump sum. The taxable component of the payment will be entitled to a tax offset that ensures the rate of income tax is as follows:
    • taxed element – maximum of 15% plus Medicare levy
    • untaxed element – maximum of 30% plus Medicare levy."
    The taxed element is simply the money you put in, e.g. $27,500 and on which you claimed a personal tax deduction so 15% in and 15% out plus Medicare levy - and Medicare levy surcharge if the non-dependant doesn't have health insurance. And up to 10% more if they have a HELP debt.

    Don't worry about the untaxed element. Mainly only applies to those who are in a defined benefit scheme such as former public service schemes which are now closed anyway.

    Money you put in on an after-tax basis isn't taxed.

    Others will likely have additional views on the matter.
     
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  13. Islay

    Islay Well-Known Member

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    What @SatayKing said for the first part of your question. The second part of the question - it is paid to your nominated beneficiary not into their super. There are a few different scenarios possible here but this is the short answer.
     
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  14. Millie

    Millie Well-Known Member

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    Negative Nancy! :)

    You didn't include this bit from your link:

    If you are a dependant of the deceased, you do not need to pay tax on the taxable component of a death benefit if you receive it as a lump sum. If you receive the benefit as an income stream, different rates of tax may apply depending on the factors mentioned above.
     
  15. SatayKing

    SatayKing Well-Known Member

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    No. You fail to see my cunning plan.

    To entice people to read and explore the full contents of the links I may post.
     
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  16. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The trustee of the superfund must pay out your death benefits as soon as practical. These can only go to 'dependants' or to your estate. This is something you would need legal advice on.
     
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  17. jaydee

    jaydee Well-Known Member

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    Having been down this road myself, my recommendation would be for each person in a couple to lodge BDN (Binding Death Nominations) with their super fund to have payouts to their estates.

    This way the funds will eventually be dealt with per the relevant wills.
     
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  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Not a good blanket rule because if the estate is challenged or a family provision claim is made the super would be part of the estate and thereby at risk.

    Each person should seek their own legal advice - from a solicitor - on the best course of action.

    But in anycase it is best to assume the estate will receive the super and for the will to take this into account and to consider optional testamentary super proceeds trusts to save tax if there any beneficiaries that are dependents still alive - but it might also be best to avoid these too.
     
  19. Paul@PAS

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

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    BDNs may lapse. Or be defective. There can be many reasons why NOT to pass super through a will

    - reversionary pensions may immediately offer a spouse financial stability vs the BDN, will route incl paying funeral expenses.
    - Time delays
    - Unintended consequences
    - Failure to maintain BOTH legal documents. This is very common. Usually combined with invalid BDNs. Hence then the fund trustee gets to choose !!
     
  20. skater

    skater Well-Known Member

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    Another newbie question.

    Say, I have an income of $100k pa from Super, which is supposed to be untaxed, but then I have other income. I'm guessing I only get taxed on the other income?
     
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