Anybody can make a non-concessional superannuation contribution into another person’s super account. The downside is that the money is inaccessible by anybody until the child reaches their preservation age,which could be many years in the future.
A better strategy would be to keep the money in your own name,so you’ve got control.
If you’ve got doubts about their ability to handle the money,leave it to them in your will through a testamentary trust,which will be controlled by the trustee – and not the child.
I am 70 and have reached my super cap due to a combination of the notional value of my defined benefit pension and my super fund,which is in pension mode.Can I still make non-concessional contributions to my accumulation account in my industry fund? I’m told there are no limits on accumulation accounts. Would I still be better off after paying the 15 per cent tax in there than earnings from a bank term deposit?
It doesn’t matter whether the fund is in accumulation mode,or pension mode,or what type of superannuation fund it is – if your total superannuation balance exceeds $1.9 million,you cannot make any further non-concessional contributions. If you do the sums,I think you will find that you can keep a hefty chunk of money in your own name and pay no tax thanks to a wide range of offsets. Don’t forget the tax rates change after June 30.
I am 83,retired,and single. I have been living on a part age pension,which has just been reduced in the March handouts. I currently have just over $600,000 in super and own my home. Should I move my superannuation to pension mode or just take out lump sum withdrawals as I need them? I am in a quandary as to what to do and can’t find any information on the benefits of one over the other.
There is no reason why you should be keeping money in the accumulation phase,where your funds are paying tax at 15 per cent from the first dollar earned. Instead,you should move it to the tax-free pension mode.
Once you are in pension mode,you will be required to make minimum drawdowns,which will be 7 per cent of the balance at 30 June last year. But this should not bother you,as you certainly could not survive on the small pension you would be getting with that level of assets.
Just keep in mind you’re asset-tested,so as you draw your superannuation down – and your account balance drops – your age pension should increase.
You have on the on a superannuation death benefit,which is paid to your estate and then distributed to non-dependent beneficiaries. Can you elaborate please? I was believing that no tax was payable by the beneficiaries if the money was distributed via the estate rather than via a binding death nomination. One of my beneficiaries will be my (currently) 10-year-old grandson.
The death tax is payable on the taxable portion of your superannuation paid to a non-dependent,whether it’s by direct bequest or through the estate. The only difference is that it’s 15 per cent plus Medicare levy of 2 per cent if left via a direct bequest,and 15 per cent if paid through the estate.
I have said repeatedly that a better strategy is to nip this in the bud before the problem occurs and withdraw all your money from superannuation before death occurs. It can then be received tax-free and distributed by your will as you wish.
Noel Whittaker is the co-author of Downsizing Made Simple with fellow finance expert Rachel Lane, available. Email:
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