Superannuation Discussion + market volatility

[Quickstatus]

I didn't think it was possible to avoid capital gains tax.

Silly question just for interest sake. Does an inheritor also inherit capital gains tax if the property was always an investment property before inheriting?

Inherited dwellings

 

[Quickstatus]

When I went from accumulation to pension phase, I stayed with the same super fund. However, I had to effectively close the accumulation account, received an exit statement and choose my pension fund investment options. I was given a new account number and had create a new log in. I also had to choose a withdrawal %, minimum 4.

Is the Withdrawal x% of the total super balance whatever the balance is?
Is the Withdrawal paid fortnightly?

 

[Buzzard]

I have no intention of doing any paid work in the future and I used the bring forward rule.that allowed me to put a maximum of $540k into super. This effectively stops me from contributing for the next 3 years so there is/was no benefit of leaving say 5k in the accumulation phase. Hope this clarifies my position @JohnM
To answer @Quickstatus I have the option of how often I withdrew the 4% and I have chosen annually. The percentage is based on the balance at the commencement of your 12 month period. So if you start the pension phase on January 1st with an opening balance of $1,000,000 you must* withdraw $40,000k.
*There is a pro-rata rule but I don't really want to complicate things.

 

[QF WP]

We need to remember that my wife is not yet an Australian resident. I'm not sure I can even include her in any superannuation.

She may be able to personally contribute (or you on her behalf) - you need to consider information about non-residents contributing to super, like this article: Superannuation for Non-Residents | Exfin - The Australian Expatriate's Gateway

"Contributions to Superannuation
Non-residents can continue to make superannuation contributions to superannuation funds in Australia; the rules regarding eligibility to make these contributions in Australia apply equally to residents and non-residents. You should, however, not make contributions whilst non-resident to a self managed superannuation in the absence of professional advice.

Under changes announced by the Government in 2007, you also do not need to be working to contribute to superannuation if you are under age 65.

Generally, it is viable and appropriate to make further contributions to Australian superannuation if your objective is to eventually retire in Australia, or if the taxation on Australian superannuation is more attractive than the country of residence. This is where taxing rights and double tax treaty arrangements may have a major impact. For example, as long as withholding taxes, or other costs, are not too significant it may be better for you to make tax effective contributions into your local pension fund which you later withdraw and transfer to Australia. There are forex risks associated with this approach, and you need to be mindful of limits on non-concessional contributions into superannuation.

Note, however, that some superannuation funds require that members are residents"

Superannuation is also a concept that my wife does not understand. She is not even remotely interested when I discuss it with her.

Superannuation is merely another investment structure to hold assets where access is deferred until a defined event (death or total & permanent disablement) or retirement of the individual once they have reached preservation age. There is also restricted access in limited other events like severe financial hardship, compassionate grounds or terminal medical condition. Getting your super | ASIC's MoneySmart

This structure that may be more tax effective than other investment structures, dependent on the persons circumstances.

 

[QF WP]

[mod hat]
This is the superannuation thread.

Any further off topic discussion will be deleted.
[/mod hat]

What don't some of you understand?

It's simple on topic or deleted.

Let's not have the need to resort to warning or infractions.

I've done a final clean up of this thread, deleting all posts that were not related to discussion about superannuution . We will now be vigilant in deleting or amending any further comments that stray from the discussion about superannuation, with resultant warnings/infractions.

 

[lovetravellingoz]

Superannuation is merely another investment structure to hold assets where access is deferred until a defined event (death or total & permanent disablement) or retirement of the individual once they have reached preservation age. There is also restricted access in limited other events like severe financial hardship, compassionate grounds or terminal medical condition. Getting your super | ASIC's MoneySmart

This structure that may be more tax effective than other investment structures, dependent on the persons circumstances.

I fully agree.

Also I posted much earlier in this thread my wife too has virtually no interest in financial matters. This is not due to any lack of IQ, but just that she has no real interest in it. Her lack of interest is still a key part of my super and indeed financial planning.

Due to this my attitude has been to set things up on her behalf and I keep her fully informed of how things are set up etc. Part of my planning now that I am 57 and she is 56 is to post 60 start simplifying our non super-assets (ie 40+ share portfolio) so that if I drop off this Mortal Coil first, or suffer dementia or other things that might limit my capacity, that our financial affairs are such that she can easily manage them.

It is also one reason even though I have been tempted to set up a SMSF that I have not.

Also there can be problems with super on your death. While it will get to your nominated beneficiaries, it may not get to them as quickly as you may wish.
The problem with death (another one) and your superannuation | Cappello Rowe Lawyers

Plus death itself may not be simple. You could be in an extended coma first. Die overseas. Have an extended period of dementia etc.
So for these, and other reasons, to have independent super income streams to me makes a lot of sense and will most likely decrease any future stress or worry for my wife, and indeed I.

I must admit too that I am a "not have all your eggs in one basket" kind of guy and so having a separate super fund, at a different super provider, for the wife and I assists in managing risk.

 

[QF WP]

A slightly long but very challenging read from Amit Lodha, Fidelity's Portfolio Manager for their International Equity Fund.

From the desk of Amit Lodha: Mr Market's memo - Fidelity Australia

Not sure if his Mr Market is Warren Buffet or the original (Benjamin Graham).

interestingly, I sat in Business Class yesterday morning to ADL (on VA) with Paul Taylor (Portfolio Manager of Fidelity's Australian Equity Fund). He recognised me as a financial planner who asks questions at his briefings.

 

[QF WP]

Just to reduce any confusion, I have merged the two superannuation threads together. The oldest (this one) is the one retained

 

[QF WP]

Okay, especially for @Denali's husband, the following article (also published by Fidelity today), is a real in-depth discussion about the tips and traps in using downside market protection: The right tool for the job - Fidelity Australia

Phew, time for lunch now after that read.

 

[Denali]

Many thanks again, Ive been forwarding him your links and hes appreciative.

I logged into my super fund today, looking much better since I started sal sac a lot more in the past few years but a reminder that Im lucky that I married someone who put a lot more effort and attention into our future than I did.

 

[rogerkambah]

Now I'm wondering about my wife's superannuation. In addition to her employer's SG she has been making monthly contributions from her post tax income.

Would her fund (Australian) be deducting 15% tax from her contributions or just from the SG component?
Is there any advantage in making post tax contributions rather than salary sacrifice? She is past her preservation age.

 

[QF WP]

Now I'm wondering about my wife's superannuation. In addition to her employer's SG she has been making monthly contributions from her post tax income. Would her fund (Australian) be deducting 15% tax from her contributions or just from the SG component?

Only the SG portion is eligible for the 15% (unless she plans on tax deducting the after tax contributions this FY - if so, then yes it'll also get the 15% tax applied after the Notice of Intent is lodged with the super fund). See here: Tax on contributions

Is there any advantage in making post tax contributions rather than salary sacrifice? She is past her preservation age.

Yes, there are pros and cons for both, some of which are more relevant based on your wife's situation.

 

[burmans]

Now I'm wondering about my wife's superannuation. In addition to her employer's SG she has been making monthly contributions from her post tax income.

Would her fund (Australian) be deducting 15% tax from her contributions or just from the SG component?
Is there any advantage in making post tax contributions rather than salary sacrifice? She is past her preservation age.

If it is post tax they should not be deducting 15% but always worth checking, it is possible to miscode the contributions.

 

[rogerkambah]

If it is post tax they should not be deducting 15% but always worth checking, it is possible to miscode the contributions.

Well, at least they got the tax correct, only taxing her SG contributions@ 15%.

However I just calced that for her own contributions it 'costs' $148.15 of income to add $100 to her super a/c (at her marginal rate of 32.5%), whereas had she salary sacrificed it would only have 'cost' $117.64 to add a net $100 to her a/c.

Hope i've miscalced this, but................

 

[JohnM]

Well, at least they got the tax correct, only taxing her SG contributions@ 15%.

However I just calced that for her own contributions it 'costs' $148.15 of income to add $100 to her super a/c (at her marginal rate of 32.5%), whereas had she salary sacrificed it would only have 'cost' $117.64 to add a net $100 to her a/c.

Hope i've miscalced this, but................

But as @QF WP noted, won’t she claim any personal contribution over the SG and up to the $25K total contribution threshold as a tax deduction?

 

[rogerkambah]

But as @QF WP noted, won’t she claim any personal contribution over the SG and up to the $25K total contribution threshold as a tax deduction?

Well yes, she will this year, as I understand this is the first year that personal super contributions are tax deductible for PAYG workers.

Prior to this year was the salary sacrifice rate 15%?

 

[burmans]

Well, at least they got the tax correct, only taxing her SG contributions@ 15%.

However I just calced that for her own contributions it 'costs' $148.15 of income to add $100 to her super a/c (at her marginal rate of 32.5%), whereas had she salary sacrificed it would only have 'cost' $117.64 to add a net $100 to her a/c.

Hope i've miscalced this, but................

No, salary sacrifice is usually better!

 

[rogerkambah]

No, salary sacrifice is usually better!

That's what my calcs suggested, but I was hoping I was wrong.

 

[amaroo]

I think I hit the jackpot marrying a CA that specialises in SMSF and tax (structures)

 

[JohnM]

Prior to this year was the salary sacrifice rate 15%?

Yes, and it still is - that is one of the reasons for doing it.

The only possible downside of SS that I am aware of is that some employers (including, I believe, the Qld Gov't - at least some time ago) would base your SG on the reduced salary that you took home. It was quite legitimate, but I think most employers didn't invoke that option.