Superannuation Discussion + market volatility

[burmans]

So salary sacrifice comes into play as well to determine the limit.

Note that salary sacrifice is a concessional component, still a cap but a different one!

 

[Quickstatus]

salary sacrifice

Yes, but I think comes under voluntary contribution. The ability to voluntarily contribute concessional or non concessional is affected by the space in the TSB

 

[burmans]

The types of voluntary contributions your super fund can accept depends on:

• your age
• whether they have your TFN
• whether you need to meet the work test
• the fund's governing rules for accepting contributions.
• your total superannuation balance in the case of a non-concessional contribution.

I’ve made voluntary contributions 4 out of last 5 years (while being above TSB) and my super fund and ATO have accepted it.

 

[OATEK]

So I have five years then. I can make two rounds of $300K so $600000. And I'll need to set up another pension fund to put the funds back in. Some can stay in the accumulation account which we both kept as well as still working.

But thinking again, when the funds are withdrawn they aren't all taken from the taxed part, are they..

So, if I turn 75 at the end of the second round (June) it's still ok to do it that year? Although if I get my act together I can do it the year before.

In my case I turn 75 this year, and I can make concessional contributions up to 30 days past my actual birthday (Note: as long as I have passed the work test, which I have).
In the case of non-concessional, you cannot recontribute after you actually turn 75, but in those months before you pass that mark you can utilise the bring forward provisions as if you could recontribute beyond age 75 (according to my advisor).

Do you recontrivute to a separate super fund to keep all the newly converted non concessional funds separate from the existing concessional funds?.

The re-contributed funds go into a holding account, and then get rolled together with my other (fully taxed) account into a new income stream account where all the funds are considered fully taxed. It has taken 6 years of withdrawal from one account and recontribution into a new account to get all my super funds from roughly 60% taxed to 100% taxed.

 

[Quickstatus]

but in those months before you pass that mark you can utilise the bring forward provisions as if you could recontribute beyond age 75

So
75 : $360k
72: $360K
68: $360K
67: $120K (2025 OAP retirement age)

Assuming TSB allows and any other rules

 

[QF WP]

The amounts will be dependent on the ruling cap amount. It has fluctuated over the years but when reset to $100K, it has then indexed behind the scenes each year until the Government actually increases it to round figure ($110K and now $120K). See table here: Non-concessional contributions cap | Australian Taxation Office

Given CPI is "higher for longer" , the $120K cap will only last a couple of years before increasing (which in turn increases the 3 year bring forward number). So the figures at age 68, 72 and within 30 days after age 75 will all likely be higher figures.

 

[CaptJCool]

So since Super is a tax arbitrage opportunity
And aside state and federal defined benefits Govt pensions, super income streams are tax-free

Of course the transfer balance cap (TBC) restricted how much of the earnings can be tax-free

The other thing people don’t necessarily get is you can obtain $54,000 ish as a taxable income (SAPTO Tax-free earnings) in addition to the tax-free super (Upto the TBC) which gives people the chance to minimise even the earnings on super above the TBC

That seems to be about $300,000 annual per couple

 

[burmans]

Not sure I’m following. If you’ve hit your TBC how are you qualifying for a pension?

 

[QF WP]

@CaptJCool isn't talking about qualifying for a pension - he states:

$54,000 ish as a taxable income

That is a couple can each earn ~$27,000 in taxable income (as distinct from tax free income) before they have to pay any tax, because of SAPTO:

Seniors and pensioners tax offset | Australian Taxation Office

Check if you are eligible for the seniors and pensioners tax offset (SAPTO) and if you can transfer unused offsets.

www.ato.gov.au

To be precise, 2024-25 effective tax free thresholds with SAPTO: $32,279 for singles. $28,974 each for couples. $31,279 each for each partner of an illness separated couple.

At that level of income there is no Age Pension entitlement

 

[burmans]

obtain $54,000 ish as a taxable income (SAPTO Tax-free earnings) in addition to the tax-free super (Upto the TBC) which gives people the chance to minimise even the earnings on super above the TBC

Selective quoting, he definitely mentioned this in addition to tax free super (Up to the TBC).

Eligibility for seniors and pensioners tax offset​

To be eligible for the seniors and pensioners tax offset (SAPTO) you must:

• be eligible for an Australian Government pension or allowance
• meet income limits for you and your spouse.

 

[Quickstatus]

The amounts will be dependent on the ruling cap amount.

But assuming the NCC amounts are correct... the scenario is correct?

If eligible , a Lump sum super withdrawal reduces the TSB?

 

[Brissy1]

...rolled together with my other (fully taxed) account into a new income stream account where all the funds are considered fully taxed.

But doesn't a new "fully taxed" account not stay that way as soon as it has earnings? So after say just 3 years of 10% earnings it is then only about 75% "taxed"?