December 2011 Q&A Newsletter

Q&A SPECIAL – super contributions, re-contribution strategy, tax-free super, DIY super, SMSF pensions, accessing super and more

Welcome to a special Q&A edition of SuperGuide, the first of two SuperGuide editions for December 2011.

This special SuperGuide newsletter contains 24 Q&As covering the following topics:

• POPULAR Q&As (4 questions). Do I have to work to make super contributions?, Can I still use the re-contribution strategy?, Do I pay tax when I start a pension before 60?, Calculating capital gains (or losses) within an SMSF.
• BOOST YOUR SUPER (4 questions). Can I put my lotto win into my super?, What is the maximum that my employer has to pay in Superannuation Guarantee?, Making contributions before and after age 65, How does the work test for over-65s operate?
• SUPER & TAX (3 questions). Super tax for beginners, Reducing CGT via super contributions, taking super benefits at age 55
• DIY SUPER (6 questions). Can I run two super funds?, Am I too young or too old to run a self-managed super fund?, What is the proportioning rule?, What’s happening with frozen managed funds?
• SMSF PENSIONS (3 questions). How do I calculate my minimum pension payment?, What date do I use for my minimum pension payment age?, Making contributions when running a SMSF pension?
• ACCESSING SUPER (4 questions). Can I access my super and continue working at age 67?, Can I access my husband’s super (age 62)?, Can I access super due to financial pressures and ill-health?, Where can I find the forms to access my super benefits?

You can find these Q&As by clicking on the links at the bottom of this email. You can find many more Q&As via the SuperGuide website.

Note: You can click on the links below or you can access the newsletter links directly via the SuperGuide website. Click here if you want to access the DECEMBER 2011 Q&A SPECIAL newsletter via the website.

COMING UP!

ANOTHER DECEMBER 2011 EDITION. The second newsletter for the month of December (and the final newsletter for the year) will be emailed and published before Christmas.

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Thanks again for your support and interest in SuperGuide.

Trish Power

POPULAR Q&As

Do I have to be working to make super contributions?

The answer is no if you’re under the age of 65. Anyone under the age of 65 can make super contributions whether they are working, rearing children, looking after a sick partner, recovering from illness or on an extended holiday. Read more

Non-concessional contributions: Re-contribution strategy still applies

Q: My wife will turn 60 next year and it has always been my intention to cash out her portion of our small self managed super fund (SMSF) and re-contribute it straight back in so as to ensure that when she and I pass away, our children are not hit by tax. Is that still a valid strategy and if so, am I correct in thinking that I only have one year in which to do it as the maximum bring forward amount will be reduced from the current $450,000 to some other number from 1 July, 2012? Read more

Tax-free super: What happens when I start a pension just before turning 60?

Q: I will be 60 in March 2012. Is the compulsory 4% drawdown from my super pension treated on a pro-rata basis for my tax return for the 2011/2012 year, or can I draw it down after March 2012 rendering my super income after 60, tax-free? Read more

CGT calculation for SMSFs

Q: If I purchased a rental property in my SMSF for say $200,000 five years ago and the house is now valued at $300,000 in the SMSF what will be the capital base for the calculation of future capital gains tax (CGT) if I transfer the house out of the fund? Will it be the original $200,000 or the $300,000? I am over 60 years and can transfer the property out of super tax-free. Read more

BOOST YOUR SUPER

Can I put my lotto win into my super?

Q: I have won $70,000 in a lotto win. How much can I put in my superannuation, and is it taxable? Read more

Upper limit on SG contributions

Q: Can you please advise the 2011/2012 cap on earnings for the maximum superannuation contributions base? Read more

Super contributions before and after age 65

I have a three part question: 1. I turn 65 in January 2012 and would like to make a $500,000 contribution by way of off-market share transfers and cash to my SMSF before this ($50K deductible and $450K non-deductible under the bring forward ruling). Read more

Over-65s work test: How does it operate again?

Q: I am a little confused by the work test requirements. I have two questions: 1. Does 40 hrs in any 30-day period include weekends or is it 6 x 5 day weeks? I read in a bank’s booklet on superannuation that it must be “at least 40 hrs in a period of not more than 30 consecutive days during the financial year ….” This seems to imply working beyond 30 days is not permitted. Read more

SUPER & TAX

Super for beginners, Part 15: Super tax – as easy as 1-2-3

Superannuation only exists because of how super savings are taxed. Superannuation savings receive tax incentives to encourage Australians to choose super as a retirement savings option. Even so, superannuation is still taxed (for most Australians) at a lower rate of tax than non-super income and savings. Read more

Turning 55: Taking super, tax and timing

Q: If at 55, I take up to $165,000 out of my super as a lump sum tax free, when I turn 60 will I be able to draw down as a lump sum the rest of my super tax free? Read more

Capital gains: Reducing tax via super contributions

Q: I have a self-managed super fund (SMSF) and I also have two investment properties in my personal name. When I sell the properties, I will be required to pay capital gains tax. Can this capital gains tax be offset by a contribution to the SMSF which would be tax-deductible? Would there be a 15% contributions tax? I am 60 years of age, but not retired. Read more

DIY SUPER

SMSF basics: Can I run two super funds? (2 questions)

Q: My wife is 58 and retired and she has her own self-managed super fund, where she has rolled over her super funds from various employers. She plans to start her SMSF pension soon. After starting her pension, could she also start another SMSF fund? Read more

SMSF basics: Is there a minimum or maximum age for starting a DIY super fund? (2 questions)

Q: My son is 16 years and just started work full-time working in administration. Can he become a trustee and member of my DIY fund? Read more

SMSFs: What is the proportioning rule?

Q: I have come across a statement which refers to a proportioning rule. Could you please explain to me exactly what the proportioning rule is, who it applies to and when it applies, and how you do the calculations for a SMSF? Read more

Frozen managed funds and SMSFs

Q: I am retired and manage my own SMSF (together with my wife) for the past 3 years. We have still some amounts in frozen managed funds and look for a forum to discuss the topic, but couldn’t see such a forum on your web site. Or have I missed something? Read more

SMSF PENSIONS

Minimum pension payment: At what date do you determine the age for payment calculation?

Q: I am drawing an account-based pension from my SMSF. I am turning 65 in September 2012. Will I need to draw a minimum of 3% or 3.75% for the 2012/13 year? Or, in other words, what is the determining age, the one at the start of the taxation year, or the age attained in the course of the taxation year? Read more

SMSF pension: How do I calculate my minimum pension payment?

Q: I run our SMSF. I am 51 and I wish to retire at 55. I am a little confused about the 4% minimum rule for pensions. Do I have to withdraw 4% of my total accumulation SMSF fund, or do I move some of the assets into a pension fund and then draw 4% a year (or whatever the pension relief amount is)? Read more

SMSF pension: Can I still make super contributions?

Q: I am 62 years of age and retired. I have recently commenced an account-based pension from my SMSF. Can I still make non-concessional contributions to that fund? Read more

ACCESSING SUPER

I’m 67. Can I access my super and continue working?

Q: I am going to be 67 yrs this year and am still working as a security guard. I would like to continue in employment for as long as possible. I have about $84,000 in super contributions – can I access $80,000 to put on the mortgage of our house and still continue working? Please please let me know if this is possible. Read more

Accessing my husband’s superannuation (age 62)

Q: I am 71 years old. I do not get the age pension because my husband is 62 years old and still working and receives a salary of $70,000 gross per year. Is it possible for him to take out part of his superannuation and still continue to work and pay out the balance of our Mortgage of $100,000? Since I am not eligible to receive my age pension from Centrelink which would have helped. Read more

Accessing super before retirement

Q: I am 60 years old, working 30hrs week, with a dependent husband (he is paid a part aged pension, hasn’t worked for 7 years due to a brain tumour). I am a carer and my income is supplemented by Newstart. We have a mortgage of $70,000. I would like to access my super to at least pay a big proportion of this out because I am not even meeting my interest only on the income I am on. Read more

Early release of superannuation forms

Q: I have been trying to access your on line early release application forms for 2 weeks with no result. Could you please e-mail me the forms. It is due to mortgage/compassionate grounds. Read more