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Commercial and Corporate update: Missed the Superannuation Contribution Deadline? All is not lost!

Nov 9, 2011

New superannuation rules came into effect from 1 July 2007 allowing individuals to take money out of their superannuation, TAX-FREE, once they reached 60 years of age.

Many people took advantage of this considerable taxation benefit by making undeducted contributions of up to $1 million into their superannuation fund before 30 June 2007.

Unfortunately, limits are now in place on the amount an individual may transfer to a superannuation fund without incurring significant taxation implication

If you missed the deadline

Individuals can still take advantage of the change in superannuation laws to contribute (per individual) up to $150,000 in non-concessional contributions per year or a total of $450,000 over three years for those individuals under 65. You can still contribute more than these amounts, though significant taxation implications may result.

Why would I do it?

There are many financial incentives including:

  • After tax contributions to superannuation can save you tax. Superanuation fund earnings attract a taxation rate of 15%. Earnings outside of superannuation can result in taxation of up to 46.5% (depending on your individual taxation rate).
  • Generally withdrawals from superannuation (once you are eligible to withdraw, e.g. when you retire) are tax free.

Most of my ‘retirement fund’ is locked up in an investment property!

This may not necessarily be an impediment. It is possible (and indeed common) to transfer property to self managed superannuation funds. The rental income will then be taxed at the superannuation concessional rate of 15%.

What about stamp duty?

Stamp duty is not payable on the transfer of a property from an individual to that person’s superannuation fund if certain preconditions are met and the transfers are made correctly. By taking advantage of provisions within the Duties Act we may be able to structure transfers to take advantage of exemptions from stamp duty.

My investment property is locked up in my family trust

Again, it may not necessarily be an impediment. It is possible to transfer free of stamp duty property from a family trust to one of the beneficiaries who is a natural person and who was a beneficiary of the trust when the trust acquired the property. That property could then be transferred to that person to his or her superannuation fund free of stamp duty.

Considering transferring property to your superannuation fund?

You should talk to your primary financial advisor to see whether a transfer of a property to your superannuation fund will benefit you financially. Then speak to us so we can properly advise you on how best to structure the transfer and make the transfer happen on your behalf. Your superannuation can be a solid and comfortable foundation for your retirement. It is therefore important that you take advantage of the changes in superannuation laws to maximise your superannuation for the financial well being of yourself and your family in your retirement.

More information

For more information, please contact Darren Brown, Principal Lawyer, on (03) 8600 8867 or dtbrown@kcllaw.com.au.

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