How to give your SMSF a boost in retirement - Caulfield Accountants

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How to give your SMSF a boost in retirement

Providing a secure and sound retirement is the obvious benefit from a pension paid from an SMSF. Before drawing your pension, there are some other things you may want to consider.  Our professional tax advisors here at Hillyer Riches want you to be aware of a few things you may not have thought of to help boost your retirement.

Tax rates in accumulation phase versus pension phase

 One of the first things you may want to consider is the tax status of your pension payments and the transition into a zero tax status. During this accumulation phase, the income and earnings are taxed at a 15% rate (realised capital gains may be taxed at 10%).

It’s common that income derived by the SMSF may be used to pay a pension to one member in the pension phase while others are in the accumulation phase.  In this case, as long as the income streams are clearly identified and segregated from those still allocated to members in the accumulation phase, or an actuary utilised, then these investments are exempt from income tax. There is neither the 15% nor the 10% on net capital gains. 

The value of imputations credits

Most SMSF’s paying a pension have shareholdings that are entitled to dividend imputation credits that can give your retirement a boost. These credits can reduce your income tax payable and even can provide you with a refund if your credits exceed the tax payable.

Note that the SMSF must have held the dividend paying shares for at least 45 days to be eligible for the imputation credit. The fund’s investment strategy must also record that it will invest in equities as well.

Transition to retirement pension

If the member was born before 1960, they will be able to start a pension at age 55. With the TTR rules (Transition to retirement) it means they can receive the TTR income and give them the opportunity to increase their pre-retirement earnings through greater tax effective investments. These extra earnings could be put back into super by way of contributions.

If you have any questions about how these SMSF retirement boosts can help you, get in touch with one of our professionals at our Caulfield Accounting firm.

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Disclaimer:

Hillyer Riches Management Pty Ltd is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

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