Superannuation Discussion + market volatility

[SYD]

Yes we did put a good chunk when we sold the family home, in 2019, I think in December. I'll check.

If that was under the “down-sizer” provision, then that‘s seperate to concessional and bring forward limits.

Not sure what impact the down-sizer has on further concessional contributions if it takes you over the TBC limit? So probably better to max out concessional contributions before using the down-sizer?

 

[Pushka]

If that was under the “down-sizer” provision, then that‘s seperate to concessional and bring forward limits.

Not sure what impact the down-sizer has on further concessional contributions if it takes you over the TBC limit? So probably better to max out concessional contributions before using the down-sizer?

We didn't use the down sizer option, I think we were too young? Anyways it was December 2019. Just before C struck. Property now worth so much more. Sigh.

 

[SYD]

We didn't use the down sizer option, I think we were too young? Anyways it was December 2019. Just before C struck. Property now worth so much more. Sigh.

The age limit for ”down-sizer” has been dropped to 55.

$300k one off into super - the actual cash could come from anywhere. In fact, you could “upsize” and still contribute so long as you sell a property that meets the rules!

 

[Pushka]

The age limit for ”down-sizer” has been dropped to 55.

$300k one off into super - the actual cash could come from anywhere. In fact, you could “upsize” and still contribute so long as you sell a property that meets the rules!

Yep. I was under 65 when we sold in 2019.

"You have reached the eligible age (and there is no maximum age limit) at the time you make a downsizer contribution

• from 1 January 2023, 55 years or older
• from 1 July 2022, 60 years or older
• from 1 July 2018, 65 years or older."

 

[CaptJCool]

Often people were finding when they downsized that there was no cash leftover to put in after buying the next smaller apartment in the CBD of acity near you

But then there was inheritance - Which was then funnelled into the no / low tax super fund

 

[Pushka]

Often people were finding when they downsized that there was no cash leftover to put in after buying the next smaller apartment in the CBD of acity near you

But then there was inheritance - Which was then funnelled into the no / low tax super fund

Yes absolutely these days. We were lucky and moved into an investment apartment that we'd purchased years earlier. Not in CBD but on Port River which is now booming. We did it up pre arrival. Carpets curtains flooring etc. We would have lost a lot of money shifting to a different place, something that isn't widely advertised.

No inheritance for me when Mum did. Some cash but not much to do anything with.

 

[SydneySwan]

@Pushka also consider having separate accumulation funds for concessional (employer SG and salary sacrifice) and non-concessional contributions (personal non tax deductible). The reason - concessional contributions form taxable component and whilst tax free to member and dependent beneficiaries, the ATO get 17% of taxable components paid to non dependent beneficiaries.

A clarification on this suggestion of separate accumulation funds for conc and non-conc. Any growth in the non-concessional fund is considered a taxable component so over time the 'non-conc' fund has an increasingly taxable component.

 

[Brissy1]

Often people were finding when they downsized that there was no cash leftover to put in after buying the next smaller apartment in the CBD of acity near you

But then there was inheritance - Which was then funnelled into the no / low tax super fund

Yes and in Sydney downsizing frequently costs over $100,000 in state stamp duty (purchase) on top of all your sales costs.
That's the "help" the state gov gives as an incentive for retirees to downsize.

 

[Brissy1]

Dixon Advisory saga, probably already flagged here, but just read about this deadline if anyone's smsf was advised by them...
"Claims must be lodged by 8 April 2024 in order for the CSLR to potentially respond and pay any compensation awarded."

AFCA slams Dixon Advisory, opens door for over 4,500 former clients | Mackay Chapman

AFCA has found against Dixon Advisory and Superannuation Services (Dixon Advisory) in a test case/lead decision that opens the door for more than 4,500 former Dixon Advisory clients to bring claims under the Compensation Scheme of Last Resort (CSLR) - but they must do so by 8 April 2024.

www.mackaychapman.com.au

 

[Rebekkap]

And in all cases you should "rollover" or consolidate your Super with one fund. I have never seen or heard a valid argument why you would have multiple accounts (as you essentially multiply your fees for no real tangible benefit, or reduction in risk).

.

Insurance is one valid reason. I can't increase or get a new life/TPD insurance policy due to a pre-existing condition that means I will not get insurance through underwriting.

My two super accounts are the only way I can maintain enough insurance that my mortgage will be paid off and I will have a bit left over to live on if I should become totally and permanently disabled.

I STRONGLY suggest checking the insurance you have through your super, and considering how much you need to ensure you or your family are comfortable if something happens to you while you're still working age, and making sure you have or can get that amount BEFORE rolling over or consolidating any super accounts you have. This is not financial advice, but personal opinion. A friend's spouse died last year aged around 50 - if their spouse hadn't had life insurance through their super, they would have been left in a position where they couldn't pay the mortgage. Thankfully they can now focus on getting the kids through the death of a parent without the added financial worries.

 

[andye]

Insurance is one valid reason. I can't increase or get a new life/TPD insurance policy due to a pre-existing condition that means I will not get insurance through underwriting.

My two super accounts are the only way I can maintain enough insurance that my mortgage will be paid off and I will have a bit left over to live on if I should become totally and permanently disabled.

I STRONGLY suggest checking the insurance you have through your super, and considering how much you need to ensure you or your family are comfortable if something happens to you while you're still working age, and making sure you have or can get that amount BEFORE rolling over or consolidating any super accounts you have. This is not financial advice, but personal opinion. A friend's spouse died last year aged around 50 - if their spouse hadn't had life insurance through their super, they would have been left in a position where they couldn't pay the mortgage. Thankfully they can now focus on getting the kids through the death of a parent without the added financial worries.

Good advice.
Converse applies too-if you are already adequately insured (for now and future) consider cutting back on the default super death/TPD options.

 

[Brissy1]

Well I suppose it's getting time to start thinking/acting on the proposed Division 296 law.
Draft here https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf

Anyone know where I can get an answer to a simple Q without having to engage a professional advisor, just for this this question...

is the proposed < or > $3M "Superannuation Balance" threshold referring to one's "Reported super balance" or "Total super balance"

eg. does one include the "value" of a CSS pension (which is not included in "Reported balance" but is in "Total balance", and to which "fund earnings" is meaningless).

 

[MARTINE]

Well I suppose it's getting time to start thinking/acting on the proposed Division 296 law.
Draft here https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf

Anyone know where I can get an answer to a simple Q without having to engage a professional advisor, just for this this question...

is the proposed < or > $3M "Superannuation Balance" threshold referring to one's "Reported super balance" or "Total super balance"

eg. does one include the "value" of a CSS pension (which is not included in "Reported balance" but is in "Total balance", and to which "fund earnings" is meaningless).

CSC website allows you to get into your account and look at the balance as deemed for ATO purposes.

Also ATO has large slabs of info on defined benefits

 

[Brissy1]

CSC website allows you to get into your account and look at the balance as deemed for ATO purposes.

Also ATO has large slabs of info on defined benefits

Got my balances through mygov...tax. And there they advise "The reported super balance may be different to your total superannuation balance" Which it is for anyone with both a Gov defined pension and another Superfund.

 

[CaptJCool]

Well I suppose it's getting time to start thinking/acting on the proposed Division 296 law.
Draft here https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf

Anyone know where I can get an answer to a simple Q without having to engage a professional advisor, just for this this question...

is the proposed < or > $3M "Superannuation Balance" threshold referring to one's "Reported super balance" or "Total super balance"

eg. does one include the "value" of a CSS pension (which is not included in "Reported balance" but is in "Total balance", and to which "fund earnings" is meaningless).

Because tax is already being paid and there’s a notional balance (16 times)
I thought it a bit rich to ask for even more.
The draft law was shalll we sat draughty

 

[MARTINE]

Got my balances through mygov...tax. And there they advise "The reported super balance may be different to your total superannuation balance" Which it is for anyone with both a Gov defined pension and another

https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf

Is this not still a draft?

I was referencing 293 as it applied to DBF

 

[CaptJCool]

https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf

Is this not still a draft?

I was referencing 293 as it applied to DBF

Page 5 For defined benefit interests, Division 296 tax is generally deferred for payment until 21 days after the first benefit is paid from the interest

this for some people would be a lot of years (decade plus)
doesn't look like once the defined benefit is in the pension phase that this rule applies....

 

[MARTINE]

Page 5 For defined benefit interests, Division 296 tax is generally deferred for payment until 21 days after the first benefit is paid from the interest

this for some people would be a lot of years (decade plus)
doesn't look like once the defined benefit is in the pension phase that this rule applies....

Later is my status

 

[Brissy1]

doesn't look like once the defined benefit is in the pension phase that this rule applies....

Thanks didn't see that bit, depressingly I think it's proposed that defined benefit "value" does effect ones liability for extra 15% tax , as page 6 example 1.21 refers to "Total" super balance, and total super balance includes value of defined benefit.

To take an extreme example for clarity, if a retired person's defined benefit Value was $3m, and one had just $100 earnings in another super fund, then proposed div 396 applies. So a more likely example, lesser pension and higher (other) super account will effect many. As I read it, if you have a significant defined benefit value it can push a modest (other) super account into 396

And does the Defined benefit Value change each year as one's pension increases, or decreases as one ages? I can't see the history of my defined benefit value unfortunately, but if it does then it would affect the % of your earnings that are taxed at 30%.

I hope I'm wrong.

 

[Brissy1]

As history shows, Treasury's estimates of revenue increases ignores/underestimates the fact that people aren't willing to simply cop it. Which is why I'm thinking up "a cunning plan!"

Another eg, many of the large SMSFs have property(ies), so of course they are not going to pay 396 tax on unrealised capital gains if they can selectively (careful of CGT) transfer out, avoid continuing 396 unrealised tax on it, and which also reduces the super fund balance so also reduce/eliminate 396 tax on the funds other earnings (considering of course your personal tax rate). Similarily for "growth" shares. Just my thoughts.

People aren't stupid.