john in oz

Welcome, this tread is for questions and information on the above in OZ.

Fact Sheets on the above will be attached and updated over time to this thread. Last Updated 06 June 2014

Types of Superannuation (super) in OZ:

Retail funds - allow you to use advisers on your account as well as provide a larger selection of both multi-manger and individual investment funds options. Most have anti - detriment payments (refund of tax paid should you die) and they also allow the holding and payment of retail Life, TPD and Income Protection Insurance. They accept most contribution types including offshore pension funds (check with them first) and comply with all release clauses. Running cost vary but a number of these funds are now Low Cost Funds with the same running cost of an industry fund being about 1% or lower than . You can see what your funds are invested in and see their performance.

Industry Funds: These are so call non profit funds with a focus on normally a particular occupation or class of people ie building or medical workers. They do not allow the payment of adviser fees, there is normally no anti-detriment payments, some have restrictions on accessing funds in financial hardship, there is very limited investment options and normally no disclosure of what you are invested in. Life, TPD and Income Protection Insurance is available with some default levels of cover normally being provided with some options of topping this up normally at retail insurance rates. Running costs are around 1% of balance. Most have restrictions on receiving funds from offshore pensions.

Self Managed Super Funds (SMSF): As the name implies you are responsible for establishing, running, investing and meeting all the legal tax and reporting requirements. You can obviously employ someone to do most or all of this for you. Running costs are normally higher than a Retail or Industry Fund with a recommend $ 200 K minimum balance required to establish the fund. However they are cheaper when you have larger balances. The advantages are: You can purchase direct property both residential and commercial properties; you have control over investment choices, and there are considerable tax advantages especially at retirement. SMSF can also hold and pay for Life, TPD and Income Protection Insurance as well as pay for Adviser Fees. SMSF are also not covered by compensation schemes should some thing go wrong ie you lose your investments through your own fault. It is best to have Professional Advice when establishing or running a SMSF due to the complexities involved.

Government Super: These are only on offer to employees of either Federal or State Governments and may have substantial restrictions on accessing or transferring funds prior to retirement and may not allow the holding and payment of Life Insurance premiums.

Other types - There above are the main types however their are some other types which are specialised and will not be covered in this forum.

TAX ON SUPER

Concessional Contributions (before tax) are taxed at 15% or 15 cents in the dollar.

Non Concessional Contributions (after tax contributions) incur no tax.

Tax on Earnings within the Super fund - 15% or 15 cents in the dollar.

Contributions Cap Limits

The Government Restricts the amount you can contribute each year into Super. Current Limits are:


Concessional (before tax) $ 25,000 per year. This increases to $ 30,000 from 01 July 2014.

Non-Concessional (after tax) $ 150,000 per year ... Note you can bring forward 2 years worth of contributions therefore you can contribute a total of $ 450,000 in one go. (3 years of contributions)
This increases to $ 180,000 pa or a total of $ 540,000 in one go (3 years of contributions) on 01 July 2014.

Penalties for exceeding the Cap Limits

In simple terms you pay the maximum tax rate on any contributions in excess of the Caps Limits. This is current % 45 or 45 cents in the dollar that exceeds the limits.
There is legislation in place or proposed that allows you to in certain circumstances to have the excess paid back to you to avoid the penality tax on the excess contributions.

When Can I Access my Super?

You must meet a condition of release:

This is normally upon reaching retirement age.

It will depend on your date of birth if born before 1960 you can access in fund at 55 but then pay extra tax on it.
At age 60 you can access in full tax free if you have retired.
At age 65 you can access regardless if you are working or not.

On top of this you can draw down a part pension from age 55 to 65 through the transition to retirement guidelines.

You can also access your super if you are Permanently Disabled and can not work,
if you are terminally ill and have 1 year left to live or
in times of Financial Hardship (part payment only)
or for treatment of urgent serious medical conditions (normally life threatening) (part payment only)

PENSIONS IN OZ

A pension is simply the conversion of your Super from Accumulation Phase to Draw Down Phase.

Whilst there are several types of Pension Funds available the main type is an Account Based Pension.

An Account Based Pension is where your funds are invested fully into the market and they go up and down with the market. (the same as it did within Super.) You then draw down on the funds to provide you a pension. There is a minimum amount that you must take out of you pension each year and this starts at 4% of the balance and increases progressively as you get older.

An Annuity (pension) can also be purchased.

Tax on Pensions

Aged 55 - 60 There may be an additional amount of tax on it depending on your circumstances. You may have to pay an additional 15% in tax.

Aged 60 onwards - tax free on draw downs and earnings within the pension fund.

No Capital Gains Tax Payable when assets are sold in pension Phase.

john in oz

Temporary Residents can claim back their Super contributions upon leaving Australia and their Visa expiring.

You can claim super benefits you accumulated while working in Australia if all of the following apply:

you visited on a temporary visa (excluding visa subclasses 405 and 410)
your visa has ceased to be in effect
you have left Australia.

Who cannot claim a DASP?

Australian citizens
New Zealand citizens
Permanent Australian residents
Retirement visa holders
Investor retirement visa holders

For more information go to the ATO site:

https://www.ato.gov.au/Individuals/S...ing-Australia/

Cheers John

john in oz

Short answer is NO - You can not claim Super contributions when on PR when you depart the country or by handing back your PR.

However you can transfer your Super funds to NEW ZEALAND under the Trans Tasman agreement.

Some people state you can claim your Super back whilst on PR but those loop holes have been closed. If you have made contributions whilst a permanent resident (PR) then you can not access that Super until you meet a condition of release.

For most people that is retirement age.

If you have made contributions whilst on a temporary resident Visa you can claim that proportion of the contributions back. refer to post on DASP.


Cheers John

john in oz

If you receive over $ 300 K in income from your employer then you pay an extra 15% tax on taxable concessional contributions on amounts over $ 300,000.

Link: https://www.ato.gov.au/Individuals/S...r-individuals/

goslar1961

Hi John, Last year you and others kindly helped me out with UK tax/UPPs etc. My question is: I started receiving monthly account based pension from Australian superannuation company, I have been advised that I do not have to show this info on my 2015 tax return. My superannuation company sent me a statement showing the gross amount they paid to me-which is about $2k more than the actual amount received into my bank a/c. They did not show any tax with held on the statement, so I'm assuming the difference between the two sets of figures is tax already paid?

john in oz

sorry can not work it out on the limited info - I would suggest a quick call to the super company and they will be able to easily explain what the difference was. :-)

goslar1961

Hi John,
Thanks for your reply. I've spoken to my super company & advise me that, no, since I'm over 65 I don't need to advise the ATO!

john in oz

Good O but did you find out what the difference was?

goslar1961

Hi John, No, I didn't. A week or so ago they posted me a "Income Stream Product for Centrelink" sheet. Shows "Gross payment (this financial year) was $18.380.44". Actual amount received in my bank was $16.110.12, payments commenced in August 2014. Ironic thing about this sheet is that they state:" This information is for Centrelink or Veterans' Affairs assessment purposes only and should not be used for taxation purposes". Before I received this sheet I rang about my super payments & tax return, so they posted the sheet to me, I spoke to the ATO & was advised if there is no with held tax fig on this sheet, then I do not need to worry about super. I rang my super company up again, this am, and was told no, I'm over 65 and the ATO will not need to know about my super.

john in oz

well that is a difference of $ 2 K - You need to follow this up with them. They may have admin fees in this or something but it seems a big difference. They should be able to explain what has occurred or how the difference has occurred.If you really get stuck just email me or PM me.

goslar1961

Hi John, Many thanks. I'll contact the super company and dig a bit more.

john in oz

good idea it pays to ask the question costs you nothing...

goslar1961

Hi John, Spoken to my super company-the $18k figure is for 2015-16-not 2014-15! The fig for 2014-15 is $17k and with my super only starting in Aug 2014 they have adjusted the number of payments. So it looks ok-should have done my sums better!

john in oz

Good to hear that it is resolved - It is my experience in dealing with such matters to always give them a call to clarify and confirm as this can save you a lot of money.

There are no stupid questions at the end of the day - only those that you never ask ! Cheers :-)