Tag Archive: super

1. All Things Budget 2022

   July 20, 2022 1:19 pm Comments Off on All Things Budget 2022

   Welcome to our latest newsletter, Budget Edition, in which we consider the main items in the budget handed down on 29 March 2022 that may impact our super clients.

   Extension of the temporary reduction in super minimum draw down rates

   The Government has extended the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023. The minimum drawdown requirements determine the minimum amount of a pension that a retiree must draw from their superannuation to qualify for tax concessions.

   Given ongoing volatility, this change will allow retirees to avoid selling assets to satisfy the minimum drawdown requirements.

   Based on this change, the effective reduced minimum percentage factors for account-based pensions (‘ABPs’) (including Transition to Retirement Income Streams (‘TRISs’)), are set out in the following table for the 2023 income year.

   Note that, for ABPs and TRISs that commence or cease part-way through the 2023 income year, a pro-rated minimum pension payment applies (unless the pension commenced on or after 1 June 2023, in which case, no minimum pension payment is required).

   Recipient’s age	Minimum percentage factor	Reduced minimum percentage factor
   Under 65	4%	2%
   65 to 74	5%	2.5%
   75 to 79	6%	3%
   80 to 84	7%	3.5%
   85 to 89	9%	4.5%
   90 to 94	11%	5.5%
   95 and above	14%	7%

   Cost of living payment

   This consists of a $250 economic support payment to help eligible recipients with higher cost of living pressures. The payment will be made in April 2022 to eligible recipients that receive payments

   such as the age pension, the disability support pension, the Eligible Veterans’ Affairs payment, or that hold a concessional card such as the Pensioner Concession Card (PCC), the Commonwealth Seniors Health Card, or the Veteran Gold card (note that this is not an exhaustive list).

   Increase to low and middle income tax offset (‘LMITO’)

   The Government has announced a one-off $420 cost of living tax offset for the 2022 income year for those with income under $126,000, which will be provided in the form of an increase to the existing LMITO. This will increase the maximum LMITO benefit to $1,500 for individuals and $3,000 for couples and will be paid from 1 July 2022 when Australians submit their tax returns for the 2022 income year.

   Temporary reduction in fuel excise

   Higher fuel prices will be temporarily reduced by halving the excise rate that applies to petrol and diesel for six months. The current rate of excise is 44.2 cents per litre and will reduce to 22.1 cents per litre under this measure, which is to commence from 12.01am on 30 March 2022.

   

   As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

   This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 31 March 2022

2. Happy Financial New Year 2022!

   July 15, 2022 12:12 pm Comments Off on Happy Financial New Year 2022!

   Welcome to our latest newsletter, End of Financial Year Edition, in which we provide you with a brief checklist of items to consider.

   Contributions

   A brief reminder of some of the types of contributions you may have the opportunity to make by 30 June 2022:

   • Concessional contributions up to $27,500 pa;
   • Non-concessional contributions (so long as Total Super Balance at 30 June 21 is less than $1.7m) – the cap is $110,000 pa;
   • Access the bring forward rules – up to $330,000 if eligible;
   • Access unused concessional contributions (30 June 2021 Total Super Balance must be less than $500,000)
   • Spouse contributions (rebate maybe applicable);
   • Contributions using the one-off work test exemption (30 June 2021 Total Super Balance must be less than $300,000).

   Pensions

   It is important for members to reconcile all pension payments received from their SMSF retirement income streams since 1 July 2021 to ensure that there is no underpayment of the minimum pension payment required to be taken by 30 June 2022. If members do not withdraw the minimum pension required, then the SMSF will lose some or all of its tax exemption, and the relevant pension account will have to be rolled back to accumulation mode.

   If you are unsure what your minimum pension requirement is, please contact us so that we can assist you in this regard. We are working through every fund to check in on this as we speak.

   Valuations

   It is a requirement that all SMSF assets be valued at market value for reporting purposes. Whilst this is a simple process for listed securities, it can be quite complicated and time consuming to determine the market value of unlisted investments.

   We recommend that all SMSFs that have either direct property or indirect investment in property via unlisted structures commence the process of getting updated market valuations as soon as possible so that the 2022 year end work is not held up. To note this does not have to be formal valuations but must be based on comparable sales data.

   Some important changes from 1 July 2022

   Contributions

   • Individuals up to the age of 75 will no longer have to meet a work test to make voluntary, non-deductible contributions;
   • The bring forward rule will be extended to individuals up to the age of 75;
   • The minimum age to make downsizer contributions will reduce to 60.

   work test

   Currently, a member aged 67 to 74 can only make voluntary contributions to super if they have worked at least 40 hours over 30 consecutive days in the financial year. This work test must be met prior to them contributing.

   From 1 July 2022, this work test will only apply to a member who wants to claim a tax deduction on voluntary contributions made to super. This means that the work test will no longer apply to any of the following contributions:

   • Non-concessional contributions
   • Spouse contributions
   • Salary sacrifice contributions

   Further, where a member does make personal deductible contributions, they will be able to satisfy the work test at any time in the financial year.

   miscellaneous

   • The Superannuation Guarantee rate will increase to 10.5% pa;
   • The $450 minimum monthly threshold to be entitled to received Superannuation Guarantee will be removed;
   • Under the First Home Super Scheme eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit (an increase from $30,000 to $50,000).

   

   As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

   This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 6 June 2022

3. Superannuation Guarantee frozen until 2021

   August 24, 2014 10:16 am Comments Off on Superannuation Guarantee frozen until 2021

   The government has just announced that it had been successful in gaining support for the repeal in the Mining Tax Tax, but with that comes a freeze on the increase in Superannuation Guarantee Contributions (SGC). Until this year’s budget, the Labor government had SGC reaching 12% by 2019. This change sees it staying at 9.5% until 2021 before increasing in 0.5% increments until 2025. Adding fuel to the fire is suggestion that with the change comes increased powers to current and future Treasurers, allowing them to make further changes to this without parliamentary approval.

   The bad news in this of course is the fact that our compulsory retirement savings will potentially fall further short of where they need to be to fund future retirement income needs. This comes at a time when the government has also increased the Age Pension age to 70 for those born after 1966, and there are grave concerns for the nation being able to fund our ageing population.

   The good news in all of this is that for the large percentage of people on Total Remuneration Packages (TRP), it means that the money stays in “take home pay” and can fund current debt and lifestyle needs. This “take home pay” though is of course taxed at Marginal Tax Rates, which for many people is far higher than the 15% that superannuation enjoys. Take someone earning $150,000 a year. If they contributed 12% to super instead of 9.5%, the tax saving would be $900 per year. That $900 saved year and invested, (assuming a 12% return incl CPI) over 15 years is over $31,000.

   
   With contribution caps now making it difficult to contribute to super later, the smart money will likely look to increased Salary Sacrifice strategies to make up likely income shortfalls later. For more about Salary Sacrificing, check out the ATO Website, and keep an eye out for next month’s Super Vision where we’ll explore the benefits in more detail.

4. How long will my super last me?

   August 22, 2014 12:31 pm Comments Off on How long will my super last me?

   Have you ever wondered what your super is actually going to give you once you decide to stop working?  When is it going to run out? Will there be any left for the kids?  Here, we use the ASFA “Will My Super Savings Be Enough” calculator to show you how you can determine:

   1. When can I access my super?
   2. How much income will it give me?
   3. How long will it last?

   Our calculator is great at anticipating that you might want to slow down a little at some point, or take work breaks, for whatever reason.  To show this flexibility, we’ve incorporated a desire to work less in our 50’s, and see what impact this is going to have on our ability to accumulate enough passive income for later.

   Here’s our scenario:

   

   We’ve then assumed:

   

    

   …and played around with some assumptions that you can tailor to your situation:

   

    

   The result is a significant shortfall, and heavy reliance on the Age Pension being available when I hit 64…

   

   For more information, plug your own details into the calculator, and give us a call if you need to accelerate your strategy.

   Remember, we’re experts at finding tax savings to boost your bottom line, now and down the track!

5. Don’t get hit with Super death taxes

   July 23, 2014 1:54 pm Comments Off on Don’t get hit with Super death taxes

   What happens after you go is often one of those things left for someone else to worry about.  But your adult kids won’t thank you for an unnecessary tax bill, so what can you do about it?

   A large portion of most people’s Super is considered “taxable” due to the fact that they or their employer have received a tax deduction when it was contributed.  By the time a pension is drawn from the fund post retirement or after age 60, it is generally tax free anyway, so largely ignored.

   BUT, if the Super finds itself in the hands of adult children (over 25 or over 18 and not studying full-time), they will pay 17% tax on a portion of the proceeds.  The portion is determined by the percentage of the fund that was considered “taxable” at the point when a pension was first commenced.

   For example, let’s assume Jack has $1m in his super fund today, of which 80% had been created through contributions that have received a deduction, along with the associated earnings.  If he were to pass away today, his children could be up for $136,000 in tax.

   The solution is to put in place a proactive “Withdrawal and Re-contribution” strategy that increases the percentage of the fund that is considered “tax-free”.

   To do this, Jack needs to:

   • Be retired, or over age 65 and therefore able to withdraw lump sums from his super fund without paying tax.  If he’s retired he can withdraw up to $180,000 as a one-off tax free payment between the ages of 55 -59, or at 60 he can withdraw any amount tax free.
   • Be able to contribute to super (if retired be under age 65, or if over 65 be able to meet a 40 hours in 30 days “work test”)
   • Be able to re-contribute the amount to super without breaching any Contribution Caps (which are typically $180,000 per year or $540,000 using the 3 year bring forward rule under age 64).  See our Post Budget Ready Reckoner for further details.

   Assuming we start this strategy early enough, Jack may be able to eradicate the taxable portion of his fund completely and save his children the $136,000 in tax.

   There’s a range of complexities and opportunities that make advice critical for the over 55’s when it comes to Super.  Ensure you, or your family members, don’t make costly mistakes during this important self-funded retirement period.