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Pay less tax
now, have more
money later
Get more out
of your super this
financial year
Important information
The information contained in this booklet applies to taxed super funds, not untaxed funds such as certain
Government or public sector schemes and does not apply to defined benefit interests.
Page 02
Everyone wants to
retire comfortably
and enjoy the good
life after years of
hard work. And
super is one of the
best ways of
achieving this.
Page 03
Make saving
for retirement
less taxing
Everyone wants to retire comfortably
and enjoy the good life after years of Here are five
hard work. And super is one of the best strategies to discuss
ways of achieving this.
with your adviser:
This is because investment earnings in
a super fund are taxed at a maximum rate
of 15% (not your marginal rate which could
be up to 46.5%1), and no tax is payable on
super benefits received at age 60 or over.
What’s more, by investing in super now you
can pay less tax on your income, obtain more
affordable insurance cover, and build up your
retirement savings.
And, depending on your circumstances, you
could be eligible for a Government
co-contribution of up to $1,500.
Read on for strategies that show you how to
make the most of your super and tax position
this financial year-end2.
To find out more, speak to a financial adviser
who can help you make the right choices for
your personal circumstances.
Page 04
Strategy 1
Grow your super without Strategy 2
reducing your income Put more into super now
If you’re an employee aged 55 or over, there is Making salary sacrifice or personal deductible
a way to save more for your retirement without super contributions3 can be a great way to
reducing your current income. This involves: boost your retirement savings.
• Arranging with your employer to put part of But if you want to invest larger amounts in the
your pre-tax salary directly into a super fund3, lead up to your retirement, you may need to
• Investing some of your existing super in a act quickly.
‘Transition to Retirement Pension’ (TRP4), and This is because the current cap of $100,000
• Using the regular payments from the TRP to pa that is available to people aged 50 or over
replace the income you sacrifice into super. will reduce to $50,000 pa from 1 July 2012.
If you’re self-employed5, this still works if you Note: Other eligibility conditions apply.
invest some of your business income in super
as a personal deductible contribution3 instead
of making salary sacrifice contributions.
More information on this strategy is contained
in our ‘Grow your super without reducing your
income’ flyer. For a copy, speak to your
financial adviser or go to mlc.com.au.
Page 05
Continued
Make saving
for retirement
less taxing
Strategy 4
Strategy 3 Top-up your super with
Invest personal assets in super help from the Government
Because of the tax effectiveness of investing If you earn7 less than $58,980 pa you could
in super, if you currently hold an investment in be eligible for a Government co-contribution
your own name you may want to cash it out to your super.
and use the money to make a personal To qualify for the full co-contribution of
after-tax super contribution6. This could be $1,500, you generally need to make a
up to $450,000 per person (or $900,000 per personal after-tax super contribution6 of at
couple) this financial year. least $1,000, and earn $28,980 pa or less.
This strategy can be particularly powerful if A reduced co-contribution may, however, be
your money is currently invested in a term paid if you contribute less than $1,000 and/or
deposit or other asset where you don’t have earn between $28,980 pa and $58,980 pa.
to pay capital gains tax (CGT) on withdrawal.
Note: Other eligibility conditions apply.
But even if you have to pay CGT when selling
assets like shares, investment properties and
unit trusts, the benefits of getting the money
into super could more than compensate for
your CGT liability.
You may also be able to use other strategies to
reduce or eliminate your CGT bill (see page 8 to
find out more).
Note: Speak to your financial adviser about the
CGT implications.
Page 06
Strategy 5
Protect yourself and
your family tax-effectively
In addition to building up your super, it’s These concessions can make it cheaper8 to
important you have enough insurance to purchase life and TPD insurance in a super
safeguard your financial plans and protect fund, or enable you to purchase a higher level
your family. of cover.
So it’s worthwhile considering taking out life Another type of insurance you could purchase
and total and permanent disability (TPD) within a super fund is income protection. If you
insurance and you can do so through super suffer an illness or injury and are unable to
or via a personal policy in your own name. work, income protection can pay you a
When purchasing these insurances through monthly benefit (typically up to 75% of your
a super fund, there are a range of up-front pre-tax income) to replace lost earnings.
tax concessions generally not available Note: To find out more about the tax and other
outside super. implications of purchasing income protection
insurance within or outside of super, speak to
For example: your financial adviser.
• If you’re self-employed5, you can generally
claim your super contributions as a tax
deduction3 – regardless of whether they
are used by the super fund to purchase
investments or insurance.
Earnings in a super
• If you’re an employee and are eligible to
fund are taxed
at a maximum
make salary sacrifice contributions3, you
may be able to buy insurance through a
super fund with pre-tax dollars. rate of 15% and
• If you’re eligible for a co-contribution, no tax is payable
you could use the extra super you receive
from the Government to help cover the on benefits received
cost of insurance. at age 60 or over.
Page 07
Make the
financial
year-end
less taxing
Strategy 1
Manage capital gains tax
Here are some If you make a capital gain on the sale of an
asset this financial year, you could consider
other year-end selling a poorly performing investment before
strategies to 30 June. This can enable you to use the
discuss with your
capital loss to offset your capital gain.
Alternatively, you may wish to delay any
financial adviser sale of profitable assets until after 30 June.
and/or taxation This way you can defer paying tax on the
professional9: capital gain for up to 12 months. And, if you
expect to earn a lower taxable income next
financial year, the capital gain may be taxed
at a lower marginal rate.
If you’re self-employed5 another option is to
make a personal deductible super contribution3
with some or all of the sale proceeds. The tax
deduction you claim could reduce, or even
eliminate, your capital gains tax liability.
Note: Other conditions apply to be eligible to claim
a personal super contribution as a tax deduction.
Page 08
Strategy 2
Bring forward
deductible expenses
To reduce your taxable income this financial For example, you could consider pre-paying
year, you could bring forward expenses that 12 months’ interest on a fixed rate investment
are otherwise tax deductible in the following loan, or pre-paying 12 months’ income
financial year. protection insurance premiums outside super
before 30 June to pay less tax this financial year.
Page 09
Seek
financial
advice
Speak to a financial
adviser to find out
how these strategies
can work for you.
But make sure you
get in quick to make
the most of the
financial year-end
on 30 June.
Page 10
Notes
1 Includes a Medicare levy of 1.5%. 6 Personal after-tax super contributions and
2 You should seek the advice of a financial adviser certain other amounts will count towards
a non-concessional contribution cap.
and/or taxation professional before acting on
From 1 July 2007, this cap is $150,000 a year
these strategies.
(or $450,000 in one year if you’re under
3 Personal deductible super contributions, age 65 in that year and don’t make further
employer contributions (including salary contributions in the following two years).
sacrifice) and certain other amounts will
7 Includes assessable income plus reportable
count towards a concessional contribution
fringe benefits, of which at least 10% must be
cap. From 1 July 2007, this cap is $50,000 pa
from employment or carrying on a business.
or, if you’re aged 50 or over, $100,000 pa for five
years until 30 June 2012. 8 Lump sum tax may be payable when a death
4 A TRP is a type of income stream investment benefit is received by a non-dependant (eg an
adult child) or a fund member receives a Total and
that allows you to access your preserved and
Permanent Disability benefit. To make a provision
restricted non-preserved super benefits when
for lump sum tax, you could increase the sum
you’ve reached your preservation age (currently
insured. While this will generally increase the
55). Limits apply to the amount of income you
premiums, the after-tax cost may still be lower
can receive each year and lump sum withdrawals
than insuring outside super, when you take into
can only be made in certain circumstances.
account the up-front tax concessions available.
5 To qualify as self-employed, you must earn
9 These strategies are used in general practice and
less than 10% of your assessable income
are presented here for information purposes only.
(plus reportable fringe benefits) from
MLC is not a tax adviser or promoter of any sort.
eligible employment.
Important information
This booklet is published by MLC Limited (ABN 90 000 000 402), 105–153 Miller Street, North Sydney,
NSW 2060, a member of the National Australia Group of companies.
It is intended to provide general information only and does not take into account any particular person’s
objectives, financial situation or needs. Because of this you should, before acting on any advice in this
brochure, consider whether it is appropriate to your objectives, financial situation and needs.
You should obtain a Product Disclosure Statement (PDS) relating to any financial products mentioned in
this brochure and consider it before making any decision about whether to acquire or hold the product.
The information in this booklet is based on our interpretation of relevant super and taxation laws as at
1 March 2008.
As these laws are subject to change, you should seek financial advice before taking any action based
on the information contained in this booklet.
For more information contact MLC
Telephone: 132 652 (inside Australia)
Website: mlc.com.au
Postal: PO Box 200
North Sydney NSW 2059
Address: Ground Floor
MLC Building 105–153 Miller St
North Sydney NSW 2060
Pre-retirees 65720M0208
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