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Some of the benefits of converting assets to superannuation by making a contribution to your superannuation may include: · Boosting your superannuation in preparation for a tax-free income stream in retirement. Note: superannuation income for people over age 60 is tax free from 1 July 2007 · Investment earnings from the superannuation assets will be taxed at a maximum rate of 15 per cent compared to your marginal rate if assets are held personally. Better still, in pension phase there is no tax on earnings, and you may be eligible to claim a tax deduction for all or part of the contribution (taxed at 15 per cent). |
Converting assets to superannuation – key features
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If you have investments in your own name, it may be worth evaluating the benefits of converting your assets into superannuation. Essentially, there are two scenarios: · Sell later – here, investments are held in your own name until they are needed in retirement. Capital gains tax will be paid at your marginal rate when the asset is eventually sold, eroding the total gain from the investment. · Sell now – this shows the result of converting a personal asset into superannuation. Here, the asset is sold and any capital gains tax liability is paid. The remaining funds are then contributed into superannuation, where the tax rate on income and capital gains is usually lower than your marginal tax rate. In retirement, the funds can be accessed tax free. |
How does converting assets to superannuation work?
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Before converting your assets to superannuation, it is important to fully understand the tax implications and preservation rules of superannuation. In addition, it may be worth investigating the possibility of starting a non-commutable allocated pension (NCAP), which may further enhance the benefits to you. |
Other converting considerations
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Need more information? To find out more about how you may be able to benefit from converting your assets to superannuation, please speak to Gino Terriaca or Mark Lester from Maxim today, 08 9489 2555. |