Pay less tax now, have more money later by whitecheese


									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

                                                                                                 Page 05
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
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

 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

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)
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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