Each year, SuperGuide publishes a super checklist for our readers. Use this list as a kick-start for your 2012 super resolutions. You may not keep all of your resolutions, but if you do just a handful of the tasks listed in the checklist below, you can strengthen the chances of a financially secure retirement.

If you do nothing else…

Check that your super fund has your tax file number (TFN). If your super fund doesn’t have your TFN, your concessional (before-tax) contributions are hit with penalty tax, and you won’t be permitted to make non-concessional (after-tax) contributions, and you’ll be excluded from the co-contribution scheme. For more information, see SuperGuide.com.au article Super for beginners, part 14: Save tax – Supply TFN to your super fund.

Combining super accounts can save you thousands of dollars in fees. If you’re not sure how many super funds you currently have, then locating these accounts and consolidating your super can add thousands of dollars to your retirement savings in an instant. For information on how to find your super accounts see SuperGuide.com.au articles Super in 3 steps: You’re probably richer than you think and Find lost super in 4 steps, and make quick cash.

Ensure you have clear plans about what happens to your super benefits and non-super assets in the event of your death. Doing some planning now can save your family a lot of heartache, and possibly save thousands of dollars in tax. Identifying who receives your super benefits when you die (by ensuring you nominate your beneficiaries) becomes more important when you plan to leave your super benefits to a non-dependant for tax purposes, such as an adult child. For more information on your life expectancy, who can receive your super benefits when you die, and the tax treatment of those benefits, check out the following articles:

• Life expectancy: Will you outlive your retirement savings?
• Estate planning: Dear Dad, Tax for everything
• Estate planning: Beware the dastardly death tax

If your tolerance for ‘New Year’ super resolutions, or in this case, Autumn super resolutions, has already reached its limit, then the SuperGuide.com.au article 8 steps to super success provides a quick overview of what I believe is the bare minimum for anyone hoping for a reasonable superannuation balance on retirement.

Now, for some more super-boosting strategies…

The first step is to work out when you plan to retire and what type of income you want to have in retirement. You can then calculate how much money is necessary to finance your preferred retirement income from the age you retire until the day you die (or beyond if you have dependants you want to look after). Work out how much super and other savings you have now and what type of cash you will have if you continue your current savings strategy. If there is a gap between how much you’ll have and how much you want then you have even greater motivation to make the most of the latest super changes. Alternatively, if you have substantial assets sitting outside the super system you may want to consider shifting some or all of your super assets within the super environment. For more information, check out our special section How much super do I need?, or alternatively, as a starting point, check out the following articles:

• A comfortable retirement: how much super is enough?
• Moving targets: Come on, how much do I really need?
• Setting a retirement target: Living on more than $50,000 a year

The level of income you earn will generally determine whether you make after-tax or before-tax contributions. If you pay more than 15 cents in the dollar tax, then super starts looking attractive from a tax saving point of view. You may also be interested in making before-tax contributions if you want to offset a large capital gains tax bill.

For information on concessional contributions check out the following article: Super concessional contributions: 2011/2012 survival guide

Warning: Anyone considering making further super contributions, or anyone on a high income, needs to be mindful of the contributions caps. If you exceed the concessional contributions cap, expect to be hit with penalty tax. NOW is the time to check the level of super contributions that you make, or are made on your behalf by your employer, to ensure that you don’t exceed the contributions cap inadvertently.

The annual non-concessional contributions cap is $150,000 for the 2011/2012 year. If you’re under the age of 65, you can bring forward up to two years’ worth of non-concessional contributions. For more information check out the following articles:

• Your 2011/2012 guide to non-concessional (after-tax) contributions
• Turning 65: Maxing out your after-tax contributions cap

Note: If you are a small business owner you may be eligible for a $1.205 million after-tax contribution limit for the 2011/2012 year (indexed), which is lifetime contribution limit, in addition to the non-concessional contributions cap. The CGT exemption permits personal contributions resulting from the disposal of qualifying small business assets. If you believe that you may be eligible then seek independent advice because the rules that apply to this exemption are complicated.

Anyone under the age of 65 can make super contributions regardless of whether they are working. If an individual is aged 65 or over, then he or she must work 40 hours in a 30-day period during the financial year in which they plan to make the contribution. For more information, check out the following articles:

• For over-65s: Ten super tips when making contributions
• I’m retired. Can I make super contributions?
• Maxing out the after-tax contributions cap

The co-contribution is a tax-free super contribution from the Federal Government when you make a non-concessional (after-tax) contribution. For more information check out the following articles:

• Cashing in on the co-contribution rules (2011/2012 year)

If you’re willing to spend some money…

If you’re making major financial decisions, particularly decisions with significant tax implications, then consider seeking independent tax or financial advice from an accountant or financial adviser who understands the super rules and charges a fee for advice rather than accepts commissions from product providers for giving you advice. Independent advisers are difficult to find, but not impossible. For more information, check out the following articles:

• THE SOAPBOX EXCLUSIVE: How to spot an independent adviser
• Help! How can we find independent investment advice?
• Six dangers when seeking super fund advice

Related posts:

1. For over-65s: Ten super tips when making contributions
2. Super concessional contributions: 2011/2012 survival guide
3. Your 2011/2012 guide to non-concessional (after-tax) contributions

You will need to confirm the specifics with your accountant, but whether income from a super pension is counted towards assessable income depends on the age of the recipient of the superannuation income stream. If the recipient is aged 60 or over, the pension income from a taxed source doesn’t count towards assessable income. If the recipient is under the age of 60 (and the benefit from a taxed source includes a taxable component), then the taxable component counts towards assessable income.

Note: the pension income (more specifically, the taxable component) of a benefit from an untaxed source is counted towards assessable income, regardless of the age of the recipient.

Background: The ATO states on its website: “Assessable income – This is a person’s ordinary income and statutory income before deductions are taken into account. Reportable employer super contributions do not form part of a person’s assessable income, but are added to it for a number of income tests that use expanded definitions of income.”

Pension income is not employment income, and nor is it self-employed income but it may form part of assessable income if the recipient is under the age of 60 and the pension income includes a taxable component; or if the recipient is any age and receives a benefit from an untaxed source.

I assume when you refer to ‘total income’ you are referring to the special income tests applicable for different entitlements such as, the ability to claim a super tax deduction or to be eligible for the co-contribution.

For example, looking at the co-contribution rules, you must satisfy two income tests both involving ‘total income’ definitions. The first test is the income threshold test, and the second test is the 10% eligible income test.

Total income for the income threshold test (quoting directly from the ATO website) is:

• your assessable income for the income year
• your reportable fringe benefits total (RFBT) for the income year
• the total of your reportable employer super contributions

less

• your allowable business deductions.

Total income for the 10% eligible income test is not reduced by allowable business deductions to ensure that self-employed individuals are not disadvantaged by low profit margins. According to the ATO, “For an individual to satisfy the 10% eligible income test, 10% or more of his or her total income must come from employment-related activities, carrying on a business or a combination of both. These amounts are referred to as eligible income amounts.”

Again, we are an information site rather than advisory site, and you will need to confirm your own circumstances with your accountant, or the ATO.

Related posts:

1. Is my super pension income counted when applying for the Commonwealth Seniors Health Card?
2. Deduction amount still applies for Age Pension income test
3. Does my superannuation pension income affect tax payable on other income?

We are an information site rather than an advisory site, and any tax questions need to be confirmed with a registered tax agent, such as accountant. Even so, I can offer you some general comments on the questions that you ask.

1. An individual can only access super benefits if they reach preservation age (currently 55) AND retire. If they don’t fall into this category then they must satisfy another condition of release to access super benefits. I explain the main conditions of release in the article 12 legal reasons to cash your super.

2. If your super benefits are classified as ‘unrestricted non-preserved’, then it is possible to access such benefits at any time. Some individuals who have been super fund members before 1999 may have some benefits that fall into this category.

3. Note that the low-rate cap for lump sum payments has increased to $165,000 for the 2011/2012 year (from $160,000 in the 2010/2011 year and $150,000 in the 2009/2010 year). If an individual is under the age of 60 and aged 55 or over, then the taxable component of any lump sum benefits within this cap are exempt from tax. The cap is a lifetime cap, rather than a cap for the taxable component of each specific lump sum payment. The tax-free component of a super benefit is always tax-free on payment, regardless of age.

4. The tax payable on super benefits is fixed but the benefit forms part of an individual’s assessable income. The ATO uses tax offsets to ensure the tax payable on the benefits is no more than the fixed benefit tax rate. For example, effective tax rate of 0% for the taxable component of lump sum benefit payments up to $165,000 (for the 2011/2012 year) and then the balance of the taxable component of the lump sum benefit is taxed at 16.5%. (The one exception is where you receive benefits from certain public sector funds and then the first $165,000 of the taxable component is taxed at 16.5%, and then the amount above $165,000 but below $1.205 million is taxed at 31.5% and the balance above $1.205 million is taxed the highest marginal tax rate (46.5%).)

5.         According to the ATO your lump sum benefit will be treated as follows (see extract below or click on this ATO link).

How will the taxed element of my lump sum super benefit be taxed?

If you:

• are between your preservation age and 60, and
• receive a lump sum super benefit that includes or consists entirely of a taxed element

The taxed element is:

• included in your assessable income, and
• subject to tax at your marginal rates (plus Medicare levy).

You will receive tax offsets to ensure that:

• the rate of tax is 0% on any amount that comes within the low rate cap ($165,000 for the 2011-12 income year), and
• you pay no more than 15% tax (plus Medicare levy) on any amount above the low rate cap in an income year.

	The low rate cap amount for 2011-12 is $165,000. It is indexed annually in accordance with average weekly ordinary time earnings. For the annual low rate cap amounts refer to Key superannuation rates and thresholds.
	If you receive one or more lump sum super benefits in an income year, you need to reduce your low rate cap amount (but not below zero) for the next income year by the total of the amounts: that are included in your assessable income for the first year (that is, the total taxable components of those lump sums), and for which you received a tax offset for the first year.
	If you receive a disability superannuation benefit as a lump sum, your tax-free component is increased to broadly reflect the period where you would have expected to have been gainfully employed. The tax-free component of your benefit is always not assessable and not exempt income, that is, it is tax-free.

Example [updated by SuperGuide]

Adapting an example from the ATO website, here’s how the super benefit is treated for tax purposes.

Michael is 56 and receives for the first time a lump sum super benefit of $300,000 on 25 July 2011. His super fund tells him that this amount consists of a tax-free component of $100,000 and a taxable component of $200,000. The taxable component consists entirely of a taxed element. Michael will pay no tax on the tax-free component of $100,000. He will include the taxable component of $200,000 in his personal income tax return as part of his assessable income. This amount will be subject to his marginal tax rate (plus Medicare levy). However he will receive tax offsets to ensure that he pays no tax on $165,000 (the low rate cap amount for 2011-12) and 15% tax (plus Medicare levy) on the remaining $35,000.

Again, we are an information site and I recommend that you chat to an accountant about your tax position. I hope this helps.

Related posts:

1. Does my superannuation pension income affect tax payable on other income?
2. Tax on super payout
3. Is super pension income considered ‘assessable income’ or ‘total income’?

Earnings are taxable on a super account in accumulation phase, even when the account is in accumulation phase for only part of the year. A super fund may need to obtain an actuarial certificate to verify the earnings relating to accumulation phase, and to verify the tax-exempt earnings relating to pension phase.

The following articles may assist you further:

• SMSF pension: Can I still make super contributions?
• SMSF pensions: How do I start one?
• Super for beginners, part 15: Super tax – as easy as 1-2-3

Related posts:

1. SMSFs: Taking lump sums from accumulation account
2. SMSF pension: Can I still make super contributions?
3. How long before I can convert an Accumulation fund to a Pension?

The tax treatment of super income is usually different for those aged under 60, compared to those over the age of 60, which also has a different impact on non-super income.

You will need to check your personal situation with an accountant, but generally speaking, super pension income (from a taxed source) received on or after the age of 60 has no impact on tax payable on non-super income. Super pension income received before the age of 60 can have an impact on the amount of income tax that you pay on your total income, although you will be eligible for a 15% pension offset on the taxable component of super pension income.

The following SuperGuide articles should also assist you with your question:

• Tax-free super for over-60s
• Retiring before the age of 60: the tax deal
• Understanding the tax DNA of a super benefit
• Turning 60 means tax-free super

Related posts:

1. Is super pension income considered ‘assessable income’ or ‘total income’?
2. Age Pension: Does my superannuation lump sum count for income test?
3. I’m under 60. Does my super payout also affect my other income, and tax bill?

If you’re searching for the latest superannuation caps, rates and thresholds then go to: Super rates and thresholds for the 2011/2012 year.

Superannuation is a concessionally taxed investment vehicle, which means the rate of tax that you pay on your personal income generally influences any decision that you make regarding your superannuation savings.

Although SuperGuide is not strictly a tax information site, for your convenience we have included the latest income tax rates, and the income tax rates for the three previous financial years (see below). Over time, this page will also include relevant tax offsets, such as the Senior Australians Tax Offset (SATO), and other tax-related information such as the Medicare levy thresholds.

Note: The primary source for taxpayers on any information relating to tax rates is the Australian Taxation Office website (www.ato.gov.au). SuperGuide doesn’t answer questions specifically on the income tax rates.

For the 2011/2012 year, you can expect a tax-free threshold on the first $6000 of your income, and you can earn up to $16,000 (for the 2011/2012 year) without paying income tax when taking into account the Low Income Tax Offset (LITO). For the 2011/2012 year, your top marginal tax rate can be 0%, 15%, 30%, 37% or 45% (plus Medicare levy).

From the 2012/2013 year, the tax-free threshold jumps to the first $18,200 of your income. You will be able to earn up to $20,542 (from the 2012/2013 year) before any income tax is payable, when taking into account LITO. From the 2012/2013 year, your top tax rate can be expected to be 0%, 19%, 32.5%, 37% or 45% (plus Medicare levy).

Note: If you’re Age Pension age or older, you may be eligible for a higher tax-free threshold by taking advantage of the Senior Australians Tax Offset (SATO). Refer to other SuperGuide articles for more information on SATO.

Source: Adapted from information on the ATO website (www.ato.gov.au). Maximum LITO payable is $1500 up to taxable income of $16,000.

Note: For the 2011/2012 year only, if your taxable income is more than $50,000 then your income will also be subject to a flood levy. The flood levy is set out in the table below.

Table source: ATO (www.ato.gov.au)

Source: Adapted from information on the ATO website (www.ato.gov.au)

Source: Adapted from information on the ATO website (www.ato.gov.au)

Source: Adapted from information on the ATO website (www.ato.gov.au)

Related posts:

1. Income tax rates for 2011/2012 and 2012/2013 years
2. Does my superannuation pension income affect tax payable on other income?
3. No tax in retirement because you SATO

You will need to talk to an accountant who can probably answer your query fairly quickly.

Generally speaking, anyone on a taxable income of $16,000 dollars a year would pay no tax (for the 2011/2012 year) and only a slight amount of tax if on an income slightly above $16,000 – if a pension tax rebate is active then it is highly unlikely any tax is payable.

In relation to a lump sum, any tax payable depends on whether you have taken super benefits in the past, and your age when you receive the super benefits. The tax-free component of a super benefit is always tax-free, regardless of an individual’s age. The taxable component of a lump sum is tax-free when received after turning 60, except when receiving benefits from certain public sector super funds.

The taxable component of a benefit is subject to tax when received before the age of 60, although you can access up to $165,000 (for the 2011/2012 year) of the taxable component free of tax. Note the $165,000 (indexed) is a lifetime limit and may take into account super benefits received in the past.

In relation to the impact of your lump sum on your other income, the SuperGuide article I’m under 60. Does my super payout also affect my other income, and tax bill? should assist.

You can also find other articles on SuperGuide that explain the tax treatment before and after 60.

Related posts:

1. Age Pension: Does my superannuation lump sum count for income test?
2. Turning 55: Taking super, tax and timing
3. Retirement: Taking benefits before the age of 60

I am not permitted to comment specifically on your financial circumstances, but I can certainly explain how the tax rules work, generally, when taking super benefits before the age of 60. I suggest you chat to an accountant/financial adviser for specific tax advice, or retirement planning advice.

Super benefits can be made up of two components – tax-free and taxable. The tax-free component is always tax-free and the taxable component is taxed depending on the size of the benefit and the age of the fund member.

Any non-concessional (after-tax) contributions form part of the tax-free component, although fund earnings on those contributions form part of the taxable component.

If an individual retires, and receives a superannuation lump sum on or after the age of 55 (but before the age of 60), he or she can take advantage of the low-rate cap, an indexed lifetime limit that applies to an individual’s taxable component. An individual can receive up to $165,000 (for the 2011/2012 year) of their taxable component tax-free, provided the component is a taxed element (all super benefits are treated as a taxed element, except certain benefits from public sector funds).

The low-rate cap is in addition to any tax-free component. If a super benefit includes a ‘tax-free component’ then no tax is payable on this component of a benefit even when an individual is under the age of 60.

Note: If an individual has withdrawn super benefits in the past, he or she may have used up some, or all, of their low-rate cap which means he or she may have to pay tax on the taxable component when he or she takes additional lump sums.

When an individual is aged 55 or over but under 60, and a lump sum exceeds the lifetime low-rate cap, then tax is payable on the taxable component at the rate of 16.5%.

Individuals who choose to take an income stream (pension) in retirement receive a double tax bonus. First, any fund earnings on assets used to finance a superannuation pension are tax-free. Second, the taxable component of pension payments is taxed concessionally via a 15% pension offset (tax rebate) on pension income. The tax-free component of a pension payment is always tax-free.

I explain how the tax-free and taxable components are calculated in the article SMSFs: What is the proportioning rule?

Related posts:

1. Turning 55: Taking super, tax and timing
2. Understanding the tax DNA of a super benefit
3. Retiring before the age of 60: the tax deal

We are not specifically a tax site or Age Pension site, but I can point you in the right direction.

Here are some links to assist you.

• Centrelink – Information you need to know about your claim for (Age Pension / Pension Bonus Scheme)
• FAHCSIA – Investing for your retirement

Generally speaking, an investment property is assessed under the Age Pension assets test, and any net rental income received is assessed under the income test. As I understand, if an investment property is sold, then the net proceeds are still counted under the assets test, and if the proceeds remain as cash or other type of financial investment (such as term deposit) then such an asset will be deemed to earn a certain rate of return for the purposes of the income test. The capital gains tax rules are the same whether an individual is under Age Pension age or over Age pension age, although the amount counted for the assets test for a particular year (e.g. before tax is paid on the gain) will need to be confirmed with Centrelink

Note that any Age Pension issues need to be verified with Centrelink, and any tax issues need to be verified with your accountant or the ATO.

Related posts:

1. Capital gains: Reducing tax via super contributions
2. Reducing capital gains tax through super contributions
3. Deduction amount still applies for Age Pension income test

We are an information site rather than an advisory site, and the answer to your question depends on the type of managed fund interests that you hold and how any capital gains (if any) are treated by the managed fund/trust and the value of the units that you hold.

The following resources may be of assistance:

• The Australian Tax Office has produced a useful document on capital gains tax that covers individuals and superannuation funds. Although the publication is designed to help taxpayers complete the 2010-2011 tax return, the document provides some excellent explanations on how to calculate an asset’s cost base, how to work out the capital gain or loss, and how to calculate the net capital gain/loss if your fund has bought sold more than one asset. You can find a copy of the ATO’s ‘Guide to capital gains tax 2010-2011’ by clicking on this link. In particular, look at the three extracts ‘What is the cost base?’, ‘capital gain’ ‘capital loss’.
• Another useful publication for background information is the ATO publication, ‘Personal Investors Guide to capital gains tax 2010/11′, but note this is not designed for SMSF trustees. It does however have helpful examples. See this link.
• A SuperGuide article explaining how CGT works for SMSFs: CGT calculations for SMSFs

Related posts:

1. SMSFs: Selling a property asset
2. SMSF and property: instalment warrants 101
3. SMSF investment: Can my DIY super fund invest in direct property?

The ATO has issued some information on the question that you asked. Generally speaking, the contribution is counted in the financial year that the super fund receives the money rather than the financial year in which the employer/individual pays the money. In certain cases however, the ATO will exercise its discretion to treat a contribution as having been made in a different financial year.

You can access the relevant ATO publications by clicking on the links below:

• Super contributions – too much super can mean extra tax
• Practice Statement Law Administration (in particular Example 7, which is outlined below. The example talks about excess contributions, but the issue of timing is the same)

I suggest you confirm the treatment of your super contributions with the ATO.

47. Example 7 37

George is 45 years of age. George’s employer contributes $50,000 each year to his superannuation plan under the terms of an effective salary sacrifice agreement. However, George was unaware that his employer’s contribution for the 2008 financial year was made late, on 3 July 2008. The employer’s contribution for the 2008-09 financial year was made on time on 29 June 2009. This resulted in George having no concessional contributions in the 2008 financial year but concessional contributions of $100,000 in the 2009 financial year. George is issued a concessional contributions tax assessment for the 2009 financial year based on excess concessional contributions of $50,000. George applies to the Commissioner to exercise his discretion and reallocate $50,000 in contributions to the 2008 financial year.

The following factors are relevant matters to consider in this example:

• Of the total contributions made on George’s behalf in the 2009 financial year, $50,000 is more appropriately allocated to the 2008 financial year.
• George could not control the timing of the contribution to his plan. George’s employer controlled the timing of the contribution. However, it is clear from his salary sacrifice agreement that George intends to spread his contributions evenly across financial years.
• George could not reasonably foresee that the superannuation contribution made under his salary sacrifice agreement would be made outside the financial year to which the contribution related.
• Had George’s employer made the 2008 financial year contribution within that year, George would not have had an excess concessional contributions tax liability for the 2009 year.

In these circumstances, a decision maker may consider that special circumstances exist and decide that the contribution of $50,000 made by George’s employer on 3 July 2008 should be reallocated to the 2008 financial year. An excess contributions tax liability in this case could be regarded as unjust, unreasonable or inappropriate because it has arisen as a direct consequence of the actual timing of the employer’s contributions which were meant to be made annually and would have been expected to be made in different years. Also, reallocating the contribution to the appropriate financial year is consistent with the object of Division 292, to ensure that superannuation contributions are spread over the person’s life.

This example describes the situation where the timing of salary sacrifice contributions made by an employer causes an artificial distortion or bunching of contributions in one financial year but where the contributions relate to different financial years. Exercising the discretion to reallocate the contributions to the appropriate year spreads the contributions and aligns them with the financial year in which the employer’s obligation arises. This is consistent with the object of Division 292.

The way in which the Superannuation Guarantee (Administration) Act 1992 (SGAA) operates may also result in timing issues. Contributions made within 28 days after the end of the quarter are taken into account for the purposes for the SGAA as if they had been made in that quarter.38 A contribution made by 28 July for example, will therefore be counted for the purposes of the SGAA as a contribution made for the quarter commencing 1 April of the previous financial year, but for Division 292 purposes it is counted as being made in the next financial year. It is possible that counting the contribution for that later year could produce excess concessional contributions. If excess contributions tax arises, the applicability of the contributions for SGAA purposes to an earlier year might form part of special circumstances and would then be a relevant matter to consider.

Related posts:

1. How is contributions tax deducted from salary sacrifice contributions?
2. That’s not fair! (No 1): Salary sacrifice can cause a SG pay cut
3. How does salary sacrifice for super work?