How are contributions split?
- Member gives a written contributions-splitting application to fund trustee
- May only request split once per financial year
- After end of financial year contributions made OR
- During financial year where entire benefit are to be rolled over that year.
- Application must specify spouse’s personal, retirement and superfund details.
- Trustee rolls over within 90 days of receiving a valid application - contributions - splitting ETP
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Roger aged 55
$500,000 in super
Salary Sacrificing $30,000 per year
Worried about excess benefits at retirement |
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Helen aged 55
$100,000 in super
No current Contributions |
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No contribution Splitting |
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With contributing splitting |
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Roger
- $1,327,122
retirement benefit
- $403,469
excess benefit
Helen
- $193,069 retirement benefit
- $318,998 lump sum tax
- $9,682 pension offset
- $74,209 total net income
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Roger
- $868,810 retirement benefit
- No excess benefit
Helen
- $651,380 retirement benefit
- $189,888 lump sum tax
- $13,181 Pension Offset
- $81,651 total net income
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$7,442 more income |
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Case Study 2 - Salary Sacrificing
Salary Sacrificing into Superannuation
Salary sacrifice means an employee forgoes (or sacrifices) an amount of their gross salary or wages in return for their employer providing non-salary benefits, such as employer contributions to superannuation.
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Anne has a marginal tax rate of 48.5% and salary sacrifices $100 into superannuation.
The full $100 will be contributed by the employer on behalf of the employee into superannuation, as opposed to the employee receiving the $100 as salary and contributing the “after tax” amount of $51.50 (i.e. $100 less 48.5%). |
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Case Study 3 - Pension
Jack is 65 and Jill is 63. Jack would like to retire and is hopeful of receiving a Pension.
Jack has decided to wait till retirement and then apply to Centrelink.
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Home |
$600.000 |
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Not counted in the Asset Test |
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| Contents |
$10,000 |
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$623,000 All counted towards the Assets Test |
| Car |
$10,000 |
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| Bank |
$3,000 |
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| Super |
$300,000 |
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| Investment Property |
$300,000 |
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Jack and Jill have no debt but they are caught under the Assets Test with Centrelink for the Pension. Therefore they will receive no Pension. Cut off point for homeowners is $497,500. Jack and Jill have $623,000
Jack and Jill have a problem with the investment property.
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Cut out of Pension Assets |
Full Pension |
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$497,500 |
$19,656 per couple and is indexed so long as your Assets are under $212,500 |
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| Please note these figures are as 1st March, 2006 |
If Jack and Jill had seen SBA Financial SIX YEARS BEFORE RETIREMENT; that is before Jack turned 59 strategies would have been as follows:-
- Sell the investment property and make a contribution to Super
OR
- Transfer the property into another name (eg. children's) - therefore stamp duty is still to be paid. Centrelink only go back 5 years, therefore Deprivation Rules apply.
If Jack and Jill selected either of the above they would have had extra money to go into Superannuation.
At first glimpse, at the age of 65 their Assets may be greater then the cut off point for any Pension.
By implementing a Term Allocated Pension and Investment of $400,000 (only $200,000 which is 50% is counted for the Assets Test.
Jack and Jill have now reduced their Assets from $623,000 (No Pension) to $423,000 (Increases - Pension of $231.00 per fortnight Per person). Jack and Jill now receive $6,006 between them per year.
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