VitaPalestrantwaseditorofthe Money
section of The Sydney Morning Herald
and The Age. She has worked on major
newspapers overseas.“If you have all your funds tied up in super and
you suddenly need cash, you would have to sell
an asset at the wrong time”
MAKE AN EXTRA $3000
Pull the money out of super
Ron, a divorcee aged 66, has saved
$2 million in superannuation.
Limited by the transfer balance cap,
he commences an account-based pension
with $1.6 million to provide him with tax-
free retirement income.
Ron has little other income.
With the remaining $400,000, he has
the choice of leaving it in super or with-
drawing it and investing it personally in
his own name.
Should Ron leave it in super’s taxable
accumulation phase, investment earnings
will be taxed at a maximum of 15% a year.
However, if he withdraws it and invests
it outside super, he will pay no tax on
the investment earnings.
This represents a saving of $3000 in
tax assuming a balanced fund invest-
ment in both cases returning 5% a year
($400,000 x 5% = earnings of $20,000pa
taxed at 15%).
In addition, if Ron leaves it in super and
dies, the taxable component of his death
benefit will be taxed at 15% plus the 2%
Medicare levy when paid to adult children.
So Ron would be well advised to with-
draw the $400,000.
Source: Fitzpatricks Private WealthTAX-FREE INCOME
How the numbers stack up
Senior Australians don’t need to invest
every dollar they’ve got into super to have
a tax-free retirement, says Colin Lewis,
head of strategic advice at Fitzpatricks
Private Wealth.
The effective tax-free thresholds for
Australians at age pension age (currently
65½years)eligiblefortheseniors and
pensionerstaxoffsetare:- $32,279fora single.
- $57,948 for a couple ($28,974 for^
each member).
So how much could you invest without
having to fork out tax dollars?
A lot of it comes down to the earnings
rate. Even so, most people will be surprised
at the numbers. Takes these examples:
Fixed-term deposit
Assuming a one-year fixed-term deposit
at an interest rate of 2.2%pa, the amount
thatseniorAustralianscouldinvest outside
superwithoutpayingtaxis: - $1,467,227fora single.
- $2,634,000 for a couple.
Managed fund
Assuming a return in a balanced fund of
5%pa, the amount that senior Australians
couldinvestoutsidesuperwithout paying
taxis: - $645,580fora single.
- $1,158,960 for a couple.
Source: Fitzpatricks Private Wealth