SUPER & TAX SPECIAL, tax freeze, best super funds, top 10 cheapest funds, 21 years of SG, franked dividends, Q&As and more
Highlights of the AUGUST 2013 newsletter are:
- SUPER TAX FREEZE! NO TAX CHANGES TO SUPER FOR 5 YEARS. Pardon me if I am incredulous about this 31 July 2013 announcement by the ALP federal government. Click on the article link below to find out more.
- LIBERAL’S PARENTAL LEAVE POLICY DILUTES FRANKING CREDITS ON DIVIDENDS. SMSF trustees and other direct share investors, and all members of large super funds, will help finance the Liberal Party’s proposed parental leave policy. Click on the article below to find out how this will happen.
- SUPER FEES: TOP 10 CHEAPEST FUNDS IN AUSTRALIA. The cheapest super fund is… Click on the link below to find out the top 10 cheapest super funds and top 10 cheapest pension funds.
- COMING OF AGE: 21 YEARS OF SG DELIVERS 7% A YEAR. In the nick of time, investment markets have bounced back to prove that SG is delivering on its long-term investment objectives. Click on the link below to find out the annual return on super for each of the past 21 years, and the long-term average. In a separate article, read about super funds gaining 3% for July 2013, and 21% for the past 12 months.
- SUPERANNUATION GUARANTEE: 10 FACTS ABOUT YOUR SG ENTITLEMENTS. If you work as an employee, then your employer must pay SG on your behalf, to a super fund. Click on the link below to discover 10 of the most important SG facts you need to know.
- MIRROR MIRROR… WHAT SUPER FUND IS THE BEST-PERFORMING FUND OF ALL?. In this article we publish some exciting information for those readers interested in hard data on the top all-rounder super funds, and also the winners in the investment performance stakes.
- … AND THE WORST- PERFORMING FUNDS. In our article, ‘We’re the best super fund, no we’re the best…’, you can discover what type of returns the poorest-performing super funds delivered, along with the top-performers.
- SUPER & TAX SPECIAL. We have a bumper collection (12) of articles and Q&As in this edition explaining the ins and outs of the tax rules applying to super, including the tax treatment of super benefits taken BEFORE the age of 60, tax treatment of public sector benefits, how super assets are taxed in pension phase, what form to use when claiming a tax deduction for super contributions and more.
- SUMMARY SUPER TAX TABLES. For your convenience, I have created comprehensive tables summarising the tax treatment of super for under-60s, and tax treatment for over-60s, including the tax treatment during accumulation phase. See articles below for tables.
- SPECIAL ELECTION EMAIL. You can expect a SuperGuide email in the week before the 7 September 2013 election, containing a summary of all super-related policies discussed before and during election time. Obviously, superannuation is not the only show in town at election time, but considering super is designed to fund your retirement, and you’re likely to be retired for a third of your life, it’s a significant issue. This special election email is in addition to the usual SEPTEMBER newsletter.
- TAX TREATMENT OF SUPER PENSIONS, AND DEATH BENEFITS. Due to the size of the AUGUST 2013 newsletter, we have held over until the SEPTEMBER 2013 issue, our coverage of recent ATO announcements regarding tax treatment of certain pension components, commutations and other matters, and what it means for your super benefits. We will also provide updated articles explaining the tax treatment of death benefits and related matters.
- AGE PENSION INCREASES. In the SEPTEMBER 2013 edition, we will be reporting the increases to the Age Pension rates, and including any changes to the deeming rates for financial investments, and increases to the thresholds for the income and assets tests for Australians seeking a part Age Pension.
More than 1 million visitors a year
SuperGuide is in its fourth year, and we are now receiving 200,000 unique visitors a month interested in super and related topics, with more than 1.2 million unique visitors over the past 12 months.
Thanks again for your support and interest in SuperGuide.
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After a frenzied few years of super fiddling by the ALP federal government (and the previous Liberal government), our political leaders have taken a breath and exclaimed ‘that’s enough!’, at least for the next 5 years. The freeze on changes to super taxes commences immediately, that is, from 31 July 2013, and will continue for the next 5 years (but only if ALP is re-elected). The change of heart by the ALP goes even further than no tax changes to super: any changes to super will only be made to the super system every 5 years. Read more
SMSF trustees and other direct share investors, and all members of large super funds, will help finance the Liberal Party’s proposed parental leave policy, according to a recent Liberal announcement. In August 2013, the Liberal Party provided more details about its flagship parental leave policy (PLP), in particular, how the annual $5.5. billion cost of the policy will be funded. Read more
We are often asked which super fund is the cheapest super fund in Australia. As you would expect, SuperGuide’s preliminary response is: “It depends…”. How much your super fund may charge in fees can depend on many factors. Read more
Since Superannuation Guarantee was introduced 21 years ago, the long-term return generated on the typical ‘balanced’ super fund account has been 7% a year, according to rating company, SuperRatings. On SuperGuide calculations, using SuperRatings data, the more specific long-term average annual return over the 21-year period is 7.27%. Read more
A popular question from SuperGuide readers is: what is the best-performing super fund in Australia? Using the term ‘best’ is dangerous in any field because it involves some level of personal judgement, and the answer can change frequently depending on what you’re measuring, and when you’re making the assessment, especially when we’re considering the current volatile markets. Usually, there are a bunch of top-performing super funds over time, and also poor-performing super funds. Read more
Asking experts and rating agencies for the answer to what super fund is Australia’s best-performing fund can be compared to the vain stepmother in the fairy tale Snow White asking the magical mirror: “Mirror mirror on the wall, who in the land is the fairest of all?”. The answer on one day may be: “You, my queen, are fairest of all” while another day it is likely to be: “Queen, you are full fair, ’tis true, but Snow White is fairer than you.” Read more
The median superannuation growth fund gained 3.1% in value for the month of July 2013 (and 21.2% for the 12 months to 31 July), with Australian and international shares being stand-out asset classes, according to rating company Chant West. Read more
If you work as an employee, and you satisfy certain minimum requirements, your employer must pay Superannuation Guarantee (SG) contributions on your behalf, to a super fund. Read more
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YOUR TAX & SUPER GUIDE
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-superannuation income and savings. Read more
If you withdraw your super benefits after you turn 60 years of age, you can expect to pay no tax on those super benefits, unless you are a member of certain public sector super funds (see summary table at the end of this article). Read more
When you retire early, you’re going to have to make a few decisions. The tax implications of your retiring before the age of 60 can depend on whether you take your super as a lump sum and/or income stream. Read more
If you retire before the age of 60, your super benefits are likely to be subject to tax — but not always. With the right structure, and usually with expert advice, many Australians retiring early can end up paying no tax (also see summary table at the end of this article). Read more
SUPER TAX Q&As
Q: I’ve just turned 58, and I’m thinking of retiring before I turn 60. I would like to know whether I would have to pay tax on my superannuation. Read more
Q: I retired in September 2012. I’m now living on a tiny super pension since then of $640 a fortnight. In September 2012, I also received a $15,000 superannuation lump sum. Read more
Q: I have tried to phone the ATO re this query but can’t get through! Could you tell me the answer to this question? I turn 55 soon and I am eligible for a super payout of $175,554 next month of which only the $554 is taxable at 16.5%. However I still intend to keep working at my $58,000 a year job and wondered how this will affect the tax payable on my super. Read more
Q: I’m 30 years old. Last year I claimed $5,000 of my super due to financial hardship – I suffered illness, and was not able to work. I only received $3,950. Will I get the balance back, since I haven’t worked since then? Read more
Q: I want to make a tax-deductible super contribution to my SMSF. I am trying to find the official form for claiming this type of deduction. Could you lead me to a link where I could find a generic S290-170 notice of intent to deduct? Read more
Q: If I make a personal concessional payment of $25,000 (tax-deductible) and a personal $150,000 non-concessional (non-tax deductible) payment into my SMSF and my personal taxable income for 2013/2014 is $20,000, are there possible tax penalties because I’m claiming $5,000 more than my taxable income, that is, will $5,000 be added to my non-concessional amount thus making it $155,000? Read more
Q: I put money into my SMSF in June 2012 from a capital gain. I wasn’t able to tell the fund at that time what it was for as my accountant hadn’t completed the figures so that notice was sent to them in April 2013. As I understood the rules, so long as the money was in the fund at June 2012, I could then withdraw any of it the following month (and did). I am over 60 and retired. I now have been told that the money not only had to be in the fund in the year the gain was made, but had to stay there until the fund actually received the Section 82AAT (1A) notice. Can you confirm? Read more
Q: After completing my personal tax return my accountant advised I was up for $45,000 in income tax – (I had ceased work and sold an investment property, then unexpectedly recommenced work). My question to you is: Can I now make a contribution to my SMSF to reduce the income tax payable personally, that is, making the contribution this tax year for last tax year? And secondly, how would I calculate the optimum amount? I am 58 years of age. Read more