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SMSF pension

Federal Budget 2017

       … Retirees given $300,000 incentive to downsize

     

The recent federal budget reforms mean that there are more savings up for grabs for pensioners, with a newly introduced $300,000 downsizing incentive for Australian pensioners.

Older homeowners now have the incentive to move out of overly large family homes by contributing up to $300,000 of the sale proceeds to their superannuation funds. This is per person – meaning a couple could potentially save up to $600,000 in total after-tax contributions.

The only criteria?

You must be aged between 65 to 74 years and have owned that home for at least 10 years.

This policy is on top of existing concessions, and is exempt from existing caps, age test, work test and $1.6 million balance test, making it a great way for everyone to boost their superannuation balance right when they’ll need it the most.

Establishing yourself an SMSF is the ideal way to take advantage of these savings, by allowing you to maximise your savings, minimise fees, while reaping the many tax benefits of SMSF pensions.

We can assist you to set up an SMSF and execute your pension, and sort out everything for you to ensure you’re getting the most out of your investments.

Tax benefits of SMSF pensions

Whichever pension type you commence, your tax rate reduces to nil on all interest and dividends paid on your investments.

After the age of 60, all withdrawals from your fund are tax-free, too. Your tax-free benefit extends to all investment returns and dividends, meaning the ATO pays out a refund on fully-franked dividend income every year from the commencement of your pension.

Any capital gains realised from the sale of assets within your fund when sold after the commencement date of your pension are also exempt from tax dues.

A pension and an accumulation fund in one

With an SMSF pension, your fund and investments remain the same.

If you’re still working, you can keep contributing. We can show you how your pension and your accumulation funds remain as one, meaning you save on both admin and fees.

Types of pensions for SMSF owners

Transition to Retirement Pensions (TRAPs) are suitable for those between their preservation age and 64, who wish to continue working while using super to supplement their income.

A TRAP allows you to withdraw up to 10% of your fund balance per year, alongside any income from your employment. You may also continue contributing to your fund if you wish, both as a pre-tax salary sacrifice and a post-tax contribution.

Simple account based pensions are suitable for anyone who has reached their preservation age and is no longer working – or those previously on a Transition to Retirement Pension (TRAP) who have reached the age of 65.

On an account based pension, you may withdraw from your fund in any manner you wish, subject to a minimum ‘pension factor’ that’s proportionate to your age.

Setting up your pension

SMSF owners can set up a pension.

We can sort everything for you and provide ongoing support and administrative assistance to ensure you remain compliant and on top of your investments.

To learn more about SMSF's, tax benefits, franking refunds and planning for your retirement call us today.

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