| DECEMBER 2014 UPDATE |
YEAR END ENTERTAINMENT AND FBT
PROJECT DO IT -_ATO
ACCESS SUPER WHILE STILL WORKING
no longer need to stop work to access your superannuation savings. The
law allows you to access your super while you are still working, as long as you
have reached your preservation age which is 55 for anyone born before 1 July
1960, and gradually increases to 60 for anyone born after 30 June 1964.
you have reached your preservation age, you can commence a Transition to
Retirement (TTR) pension from your self managed superannuation fund (SMSF). The
minimum amount of pension that you can access is based on your age at 1 July or
at the commencement of your pension, and a percentage of your pension account
balance. This starts at 4% for people aged under 65 and gradually increases to
14% for ages 95 or older. If your pension commences during the year, the
minimum amount is based on a pro-rata calculation from the commencement
date. The maximum amount of TTR pension you can receive is 10% of your
pension’s account balance. The pension must be paid as a non-commutable
income stream, which means you cannot convert it to a lump sum until you meet a
condition of release such as turning 65.
can also continue making contributions into your SMSF once you commenced a TTR
pension. You could contribute your salary into your SMSF and replace it
with a TTR pension. By doing this your SMSF will pay 15% tax on the sacrificed
salary instead of you paying tax at your marginal tax rate. Of course,
you need to consider the concessional contributions cap of $30,000 per annum,
or if you are 49 years of age or over on 30 June 2014, the cap of $35,000 per
could even receive a TTR pension and re-contribute it back into your SMSF as
non-concessional contributions. This increases the tax-free portion of
your superannuation savings. You need to consider your non-concessional
contributions cap of $180,000 per annum or, if you are under 65 at any time in
the first year you make a contribution in excess of the annual limit, the cap
of $540,000 in one year or over three consecutive financial years. If you
do re-contribute the pension back into your SMSF and you are aged 65 to 74,
then you need to satisfy the work test. This involves having worked 40 hours in
30 consecutive days in a financial year.
tax advantages of accessing a TTR pension from your SMSF is that the investment
earnings from the SMSF’s assets supporting the pension are tax-free. On
top of that, if you’re 60 or older, your pension is also tax-free in your
hands. If you are aged 55 to 59, the taxable component of your pension is
taxed at your marginal tax rate with a 15% tax offset.
can stop your TTR pension at any time and revert your SMSF back to an
accumulation phrase. Before doing anything, make sure your SMSF’s Trust Deed
allows for a TTR pension.
Gold and Platinum members read on for how you can access a transition to
retirement pension and re-contribute the money back into your SMSF to reduce
tax payable on your pension or tax payable by your non-dependents.
MERRY XMAS AND A PROSPEROUS NEW YEAR TO ALL MY COLLEAGUES AND CLIENTS