Can your superannuation be more tax effective?
In a past article, we spoke about hidden taxes within your superannuation. Taxes that, without the proper planning, could affect both your retirement and your beneficiaries when you pass away. In short, the composition of your superannuation and your age can ultimately play a part in the tax effectiveness of your nest egg.
What can you do?
With some forward planning, there are strategies to make sure you will not get caught out. We will outline once such strategy on this article.
What is it?
This strategy is referred to as the “Recontribution Strategy.” By utilising this strategy you are able to change the composition of your superannuation balance. This may make it more tax effective in your hands and eventually in the hands of your beneficiaries.
How does it work?
The objective of the strategy is to maximise the tax free component of your superannuation.
This is achieved by withdrawing taxable superannuation components and contributing them back into your superannuation as a non-concessional contribution . A non-concessional contribution forms a part of your tax fee component
Who may benefit?
- Those who may retire before age 60.
- Those whose beneficiaries are not financial dependants under the definition of the Australian Tax Office.
Things to Consider
In order to utilise this strategy there are a few key considerations:
- What is the current preservation status of your superannuation funds?
- What are your taxation implications of the withdrawal step of the strategy?
- Can you contribute back into super?
- How will this affect your superannuation contribution caps?
As with any superannuation strategy your first step should always be to seek advice from a professional. There are multiple steps to this strategy and you must get each one right or risk paying more taxation than your should.
If you think that this strategy may suit your situation, seeking advice as soon as possible will allow you the time to get everything in place – timing is paramount. Schedule a no-obligation Discovery Meeting with Louella Jorge to explore how professional advice can help you.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. Louella Jorge is an Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser before you act