How Long will my Money last?
We have the tools to work out where you are going and how long your retirement savings will last. With This information, you'll be able to work out what actions you will need to take to have the retirement lifestyle you want.
Superannuation
What is superannuation?
Superannuation is money set aside during working life that you can use as an income when you retire. In other words, the money saved in super funds secures your financial future. The more money you put in your superannuation fund, the more will be your retirement savings.
Superannuation is mandatory for all people who work and reside in Australia. Federal law has made it compulsory for employers to contribute at least 10.5% of employees’ earnings to their super accounts on top of their standard wages. However, if you run a business, you can set up a super fund and put money into it regularly.
Your accumulated savings are withdrawable upon retirement.
Why is superannuation important?
The benefit of superannuation is that it secures the financial future of the Australian working population. As your super balance grows with investment returns, you can meet your financial needs and lead an independent and happy retirement life.
This retirement income helps you supplement your Australian Age Pension and make a shift from earning a regular salary into a retirement pension. So, when you retire and no longer earn an income, you can access your superannuation rather than simply depending on the age pension to support your living.
Pay less income tax
With a salary sacrifice agreement with your employer, instead of paying the income tax rate you’d normally pay based on your salary, your contribution will be taxed just 15%. Voluntary after tax super contributions are also beneficial and you may also be able to claim a tax deduction for these contributions. Just be mindful of super contribution caps
Pay less tax on investment returns
When you invest outside of super, any income earned is taxed at your marginal tax rate. Within super however, the investment earnings your super balance makes while in your accumulation account are also generally taxed at the low rate of 15%. (But of course, these savings are locked away until you retire.)
Ensure your super goes to the right person
or most Australians, super is their second largest asset after their family home. What a lot of people don’t realise however is that super does not automatically become part of their estate on death and is therefore not covered by their Will. With a binding beneficiary nomination you can ensure your super goes to the right person when you die. A binding beneficiary nomination just needs to be witnessed and sent to your super fund, and is valid for three years – there is no need to go through lawyers, and it gives you peace of mind that your super benefit goes to your intended beneficiary.
Your super is protected against bankruptcy
As long as your superannuation savings are held in a regulated super fund, bankruptcy will not impact your retirement savings, and your money will be protected from creditors. Similarly, any money withdrawn from your super after bankruptcy, is usually protected. It’s worth noting that any funds that are withdrawn from your super prior to bankruptcy are an asset of the bankrupt estate.
Tax free income when you retire
After you turn 60 and retire, you're typically able to access your superannuation without paying tax. This is available to you whether you withdraw money through a superannuation income stream, or a lump sum, provided you’re with a taxed super fund.
Extra money from the Government
If you’re not on a high income, and you make voluntary after tax super contributions, you can grow your super even further by getting an extra boost from the government co-contribution.
You must contribute to your account by 30 June each year, and the government will determine your eligibility. Your super fund must also have your TFN on file. This could be really valuable if you or your partner go on parental leave, and therefore receive a smaller portion of your ordinary income.
Self Managed Superannuation Funds
TAKE CONTROL OVER YOUR RETIREMENT PLANNING AND INVEST IN ASSETS YOU WANT TO
At Business Initiatives, we believe that you should be in control of your wealth creation strategies, tax minimisation strategies and investment choice. Our clients are in the best position to decide for themselves how they can create wealth and plan for their retirement.
We can help you set up a Self Managed Superannuation Fund (SMSF), advise you on the best strategies to save you tax and invest in assets that are best suited to create you wealth.
WHY HAVE A SMSF?
You can decide how your fund is managed and control where your money is invested. Our clients often report that having greater visibility over their retirement savings has led to a deeper understanding of how their overall wealth is tracking, and given them more confidence in their investment and lifestyle decisions.
A SMSF CAN OFFER YOU SIGNIFICANT BENEFITS:
Investment choice
SMSFs provide more investment options than any other super fund. Trustees can access direct shares, high-yielding cash accounts, term deposits, income investments, direct property, unlisted assets, international markets, collectables and more. You decide where your money is invested.
Tax strategies
SMSFs benefit from concessional tax rates. In the accumulation phase, tax on net income is capped at 15 per cent; in the pension phase there is no tax payable, not even capital gains tax. Carefully considered tax strategies can help trustees grow their super savings and reduce tax payments as they transition to retirement.
Protection
You can protect yourself and your family’s lifestyle from the financial consequences of death, sickness or accident in a more tax effective environment via the use of a SMSF compared to individual ownership of policies.
Flexibility
SMSFs allow multiple members to run a mixture of accumulation and pension accounts. Trustees can adjust their investment mix as it suits them, allowing for a fast response to changes in market conditions, super rules or personal circumstances.
Transparency
SMSFs offer significant transparencies that allow trustees to align their personal goals with their investment decisions. Whether you’re passionate about property, shares or sustainable and ethical investing, SMSFs allow you to better understand where your money is invested, with complete visibility over performance and tax treatment.
Cost
SMSF trustees must lodge an annual tax return and audit and pay ATO fees (these are capped and not based on a percentage of your super balance). The more an SMSF grows, the more cost-effective it becomes, but the total cost of running an SMSF will depend on the related investments and any costs associated with engaging professional support.
HOW DOES A SMSF WORK?
A SMSF is a private superannuation fund you manage yourself, regulated by the Australian Taxation Office.
A SMSF works much the same as a normal retail superannuation fund. It accepts contributions from members and invests and manages those contributions and subsequent earnings. It is responsible for paying tax and making payments to members who are retired (i.e. lump sums and pension payments).
WHAT ARE THE TRUSTEE’S DUTIES?
The trustee is responsible for establishing the trust deed, setting and maintaining the fund’s investment strategy, finalising reporting obligations, lodging tax returns, payment of levies and taxes, and compliance with Taxation Office laws and regulations. Whilst this may seem daunting, at Business Initiatives, we handle all these responsibilities for you.
WHO CAN BE IN YOUR SMSF?
The fund can include anyone, but usual members are relatives such as your spouse, children and/or parents (up to a total of four members).
WHAT CAN’T A SMSF DO?
There are restrictions on what SMSFs can and cannot do. There are some types of assets which a SMSF cannot invest in. Loans to members or relatives are not allowed. Your SMSF cannot buy your family home from you.
The fund must be run to meet the sole purpose of providing retirement benefits for members. A SMSF which contravenes the regulations risks being declared non-complying and losing its concessional tax status. In such a case, all contributions and earnings would be taxed at 45% instead of 15%.
