INVESTMENT SPECIAL, Top 10 funds, SMSF pensions, updated contributions guides, SATO, Age Pension changes and more
Welcome to the JULY 2011 edition of SuperGuide newsletter, a free and independent source of superannuation information for consumers. The highlights of the JULY 2011 SuperGuide newsletter are:
- THE SOAPBOX: IS YOUR SUPER FUND GAMBLING WITH YOUR RETIREMENT SAVINGS? Complacency when investing is financially dangerous, especially in the wake of the global financial crisis. It seems that many of our large super funds have not yet grasped the lessons of this new investment world: failing to hedge against the Australian dollar on international share investments is a major boo-boo. Click on the article link below to find out how failing to hedge has carved 3% from your super fund’s return for the 2010/2011 year and threatens to cause more damage this year.
- TOP 10 PERFORMING SUPER FUNDS FOR 2010/2011 YEAR. The top 10 super funds of the year are… you’ll have to click on the link below to find out.
- ASSET CLASSES: NAMING THE INVESTMENT WINNERS FOR 2011. You will be surprised by the investment categories that starred and the asset classes that struggled. Click on the link below to find out the winners and losers.
- SMSF PENSIONS: WATCH OUT FOR A SHOCK (ING) TAX BILL. A pension account can revert to an accumulation account upon a member’s death, according to the ATO. What this means is that your family end up paying tax on the sale of fund assets, and also on fund earnings that were previously tax-exempt. This tax is imposed on the pension account rather than the benefit payments, which means your family may end up paying two dollops of tax – earnings tax, and benefits payment tax. Click on the article link below to find out more.
- SUPER FUNDS DELIVER 9.2% FOR 2011 FINANCIAL YEAR. The median superannuation growth fund delivered an interim return of 9.2% for the 12 months to 30 June 2011, according to rating company Chant West. Click on the link below to find out more.
- UPDATED CONTRIBUTIONS GUIDES. Our contributions survival guides are very popular with SuperGuide readers, and we have now updated them for the 2011/2012 year. You can check out the guides by clicking on the links below. You can also access them by clicking on the links at the right-hand side of the home page.
- AGE PENSION JULY 1 CHANGES. Every year, from 1 July, the Age Pension income test thresholds and Age Pension assets test thresholds are adjusted. The deeming rate thresholds for investment income are also adjusted. Click on the article links below to find out more.
In this month’s newsletter, we also give you the Senior Australians Tax Offset (SATO) thresholds for the 2011/2012 year and for your convenience, we have included the latest income tax rates and the rundown on the carbon pricing tax cuts promised from the 2012/2013 year.
We are still in the process of updating relevant content for the 2011/2012 financial year, although we have updated key information such as the contributions guides, Age Pension changes and tax rates and super thresholds. We have a slight backlog in the time taken to acknowledge emails. Although we acknowledge all emails, due to the number of emails that we receive, we cannot promise to respond to all questions.
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Thanks again for your support and interest in SuperGuide.
Trish Power
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THE SOAPBOX
THE SOAPBOX: Is your super fund gambling with your retirement savings?
Complacency is a dangerous state of mind when you’re investing billions of dollars on behalf of millions of Australians, especially in the wake of the global financial crisis (GFC). Apparently many of our large super funds have not yet grasped the lessons of this new investment world and have not fully appreciated that taking a ‘business as usual’ approach no longer works.
FEATURES
Top 10 performing super funds for 2010/2011 year
Investment returns for the growth investment options within super funds ranged from a low of 6.6% through to a high of 12.5%, according to figures released by rating company Chant West. The Top 10 performing super funds for the 2010/2011 year, and the top 10 super funds for the seven-year period to 30 June 2011 are listed in the tables in this article.
Asset classes: Naming the investment winners for 2011
If you’re a regular reader of the daily newspapers, or an avid watcher of the financial news on television, you may hold the view that the international sharemarkets have been doing rather poorly lately, and that international property as an investment is generally something to avoid. Apparently international exposure in an investment portfolio paid off during the 2010/2011 year, provided your international investment was hedged against the Australian dollar.
Super funds deliver 9.2% for 12 months to 30 June (2010/2011 year)
The median superannuation growth fund delivered 9.2% for the 12 months to 30 June 2011, ahead of the long-term expected annual return of about 7% per annum, according to rating company Chant West. Even so, super accounts have still not recouped all of the losses suffered during the Global Financial Crisis.
SMSF pensions: watch out for a shock(ing) tax bill
This article has been updated due to the July 2011 release of Draft Taxation Ruling TR 2011/D3 ‘Income tax: when a superannuation income stream commences and ceases’. The ruling is not yet legally binding but a final tax ruling will be issued after taking into comments received from the super industry and interested citizens.
No tax in retirement because you SATO
The superannuation tax rules are not the only tax benefits that you can take advantage of in retirement. If you are aged 60 or over, your superannuation benefit from a taxed source is not included as part of your assessable income. Most Australians receive super benefits from a taxed source, unless you’re a member of one of the older public sector super funds.
Income tax rates for 2011/2012 and 2012/2013 years
In July 2011, the federal government announced the introduction of a carbon tax on Australia’s biggest polluting companies. According to the government, more than half of the revenue raised from the carbon tax will be redirected to Australians in the form of tax cuts (for taxpayers) and a Clean Energy Supplement (for Age Pensioners and others). The tax cuts and supplement are designed to compensate Australians for the expected cost increases that will be passed onto consumers when the carbon tax is introduced from July 2012.
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UPDATED CONTRIBUTIONS GUIDES (FOR 2011/2012 YEAR)
Super concessional contributions: 2011/2012 survival guide
Concessional contributions (before-tax contributions) include your employer’s compulsory Superannuation Guarantee contributions, and any salary sacrificed contributions that you arrange for your employer to deduct from your before-tax salary. If you’re self-employed, or substantially not employed, you can make concessional contributions that you claim as a tax deduction in your tax return.
Your 2011/2012 guide to non-concessional (after-tax) contributions
Non-concessional contributions are more popularly known as after-tax contributions. You may even hear them called ‘undeducted’ contributions. Such contributions are subject to a contributions cap, which sets a limit on the amount of after-tax contributions that you can make in one year (1 July through to 30 June). If you exceed the cap, your excess contributions are likely to be subject to penalty tax.
Cashing in on the co-contribution rules (2011/2012 year)
The Federal Government is giving away money to anyone who makes a non-concessional (after-tax) contribution to their super fund, and who earns less than $62,000 a year. The tax-free giveaway is officially called the co-contribution scheme.
AGE PENSION CHANGES FROM 1 JULY
Age Pension: Assets test threshold increases up to 3 times a year
Q: Do you know how frequently the values in the Age Pension assets test are increased by the government?
Age Pension: Income test threshold increases up to 3 times a year
Q: Do you know how frequently the the Age Pension income test thresholds are increased by the government?
Age Pension: Deemed income may rise with interest rates
Q: As I understand the position for the Age Pension income test, income from financial assets is worked out by deeming (capital value times rate). The rate is currently 4.5% per annum (although 3% on first $45,000 or so for a single person, and first $75,000 or so for a couple). This is a relatively low point in interest rate cycle, although the deeming rates have risen from 4% (and 2%) about 18 months ago. What happens when deeming rates continue to rise?
