Super Snapshot – June 2014

Clear Vision • June 3, 2014

This month we will expand on our age-based super strategies series by discussing the ‘withdrawal and re-contribution strategy’. This strategy is available for SMSF members who are over 60 and is a particularly useful tool for estate planning.

Cheers
Justin

 
Recently we featured a Super Snap Shot article in regards to different types of contributions. Here’s a quick recap:  Concessional contributions are contributions which are made from pre tax money . When you make a concessional contribution to your fund, the fund pays tax on this amount at a rate of 15%. Consequently the contributor (usually your employer or in some instances, you personally) can claim this amount as a deduction. Concessional contributions include: Superannuation Guarantee Contributions (that is, the 9.25% paid by your employer), salary sacrifice contributions and certain types of personal contributions. Non concessional contributions: are contributions made from post tax money . These contributions are not taxed when they are received by the superannuation fund as they have already been taxed in your hands. 

The type of contribution made is very important as this will govern how the money is held in the superannuation fund and ultimately, the taxation treatment when the money is paid out. Concessional contributions (pre tax contributions) will add to your taxable component. Non concessional contributions (post tax contributions) will add to your tax free component.

Example:
Terry is 62 and is the sole member of her superannuation fund. Terry is a widower and has 2 adult children who will receive all of Terry’s superannuation balance when she passes away. Terry works 3 days a week for her company Tex Pty Ltd. Tex Pty Ltd pays Terry an employer contribution of $25,000 in the 2014 financial year. Terry also makes a non concessional (post tax) contribution from her personal money of $5,000. Terry’s $25,000 employer contribution will increase her taxable component, Terry’s $5,000 non concessional contribution will increase her tax free component.

Pension Commencement

Once an income stream has been commenced the proportion of taxable and tax free balance on the start date of the income stream are locked in and will not change for the life of that income stream.  When you begin to draw down on your income stream, the money coming out of the fund is made up of taxable and tax free components in proportion. (e.g. if the Fund has 70% taxable balance, each payment will be made of 70% taxable money).For members over the age of 60, the taxable vs. tax free proportions do not have a direct tax effect as ALL withdrawals are tax free. There is however, an indirect effect and this arises when Terry passes away. Upon death, Terry’s two adult children are non-dependant beneficiaries for tax purposes and therefore are liable to pay tax on the taxable component of Terry’s superannuation balance.

The Withdrawal and Re-Contribution Strategy

Using the withdrawal and re-contribution strategy, Terry’s taxable and tax free balances can be ‘refreshed’ so that her beneficiaries don’t receive an unexpected tax bill with their inheritance. A withdrawal, re-contribution strategy cycles money out of the superannuation fund as a income stream payment and then immediately deposits it back in again as  a non concessional contribution. A new income stream is immediately started on the non concessional contribution on the date of deposit to isolate this money and lock in the 100% tax free status. Because the money is deposited as a non concessional contribution, no tax is payable by the Fund and because the member is over the age of 60 at the time of withdrawal, no tax is payable by the member. In addition, neither party is better or worse off as the money ends up where it started – the benefit will be to any adult beneficiaries of your superannuation benefits when you pass away.

Trustees should note, while the actual process may appear simple enough, throughout this process, care needs to be taken in regards to optimum timing, maximum withdrawal limits, non concessional contribution caps and eligibility to make contributions as well as preparation of new pension documentation. Please do not attempt this strategy without contacting us. Harsh penalties can be imposed by the ATO for exceeding contribution caps or early access to superannuation balances including taxes of up to 93%! We will not only ensure that this strategy is right for your situation but also guide you through the process to ensure everything is conducted in accordance with tax and superannuation legislation.

If you are interested in the above strategy or would like to discuss how your superannuation can work harder for you please contact our office on 07 4688 2500.

 

What Records to Keep for Your Rental Property

By Caroline Gillies • August 3, 2025
If you own a rental property or holiday home, keeping the right records is key to maximising your tax deductions and staying ATO-compliant. This week, we’re highlighting what the ATO expects you to keep when it comes to residential rental properties. Here’s a quick checklist of the documents you should hold onto: Purchase & Sale Documents – Contracts, settlement statements, and legal documents. Loan & Ownership Records – Loan statements, refinancing documents, land tax assessments. Rental Income – If you don’t have a rental statement you will need to document all rental income received, including bond money retained, insurance payouts, and any other reimbursements. Expenses & Repairs – Keep receipts and invoices for expenses like advertising for tenants, property agent fees, council rates, strata levies, repairs, maintenance, insurance, and interest on loans. Depreciation & Capital Works – Receipts for assets over $300, depreciation reports, and capital improvement records. Before and after photos of any capital works. Holiday Home Use – If your property is rented out part-time, you’ll need evidence of when it was genuinely available for rent (e.g. booking requests, advertising, availability calendars). How long to keep records: You’ll need to keep most records for at least 5 years after lodging your tax return, or longer if claiming capital works or carrying forward losses. Keeping detailed records ensures you claim everything you're entitled to—and makes things much easier in the event of an ATO audit.  Need help getting your documentation in order? Reach out to our team at Clear Vision Accountancy Group—we’re here to help. To read a more detailed list of items you need to keep for your rental property visit: Records for rental properties and holiday homes | Australian Taxation Office

How Much Do You Need to Make? Understanding Business Turnover

By Caroline Gillies • July 13, 2025
Running a business isn’t just about making sales — it’s about making enough sales to cover your costs and pay yourself what you deserve. But how do you figure out how much turnover (aka revenue) you actually need to make each month? Knowing this number helps you: Set realistic sales targets Price your products or services properly Know when to cut costs or increase margins Understand when your business is sustainable This isn’t just about numbers — it’s about clarity and control. Once you know your required turnover, you can stop guessing and start planning. Whether you’re a solopreneur, a growing startup, or a small business owner, this is the foundation of making your business work for you — not the other way around. We love numbers — seriously. And we get that not everyone does. If you need help breaking things down in a way that’s simple, practical, and actually makes sense (even if numbers aren’t your thing), call Clear Vision Accountancy Group today on 4688 2500.

12% Superannuation Guarantee - 1 July 2025

By Caroline Gillies • June 22, 2025
From 1 July 2025, the Superannuation Guarantee (SG) rate in Australia will increase to 12%. This means employers will be legally required to contribute at least 12% of an eligible employee's ordinary time earnings to their superannuation fund. This increase is the final step in a legislated rise from 9.5% in 2021 to 12% by 2025, aimed at boosting retirement savings for Australian workers. If you use Xero for payroll, the SG rate should automatically update in the system. However, we recommend you double-check your payroll settings to ensure everything is correct. If you’re unsure or need assistance, please contact your bookkeeper or get in touch with us at: Clear Vision Accountancy Group (07) 4688 2500 We’re here to help you stay compliant and avoid any costly errors.