The 8 key questions you need to ask about your superannuation!
1. Do you have lost superannuation?
If you have changed jobs in the last 21 years, there is a good chance you have “lost superannuation”. These amounts are old superannuation benefits that your employer paid to a fund on your behalf, however, the fund no longer has your current contact details.
There is currently $18.2 billion held in lost superannuation, happily the ATO’s ‘SuperSeeker’ website allows you to easily check. Click here to check if you have any benefits owing to you.
The site also provides the facility to rollover any wayward superannuation accounts into your nominated fund. For those considering migrating over to an SMSF in the near future, this is an essential step. The process is quick and surprisingly simple.
There are a number of benefits in consolidating your superannuation which include:
- lower overall fees;
- a healthier superannuation balance when you retire;
- a consistent investment strategy; and
- opportunities to diversify your superannuation portfolio.
2. Have you considered topping up your superannuation?Whilst you may receive compulsory contributions, are you maximising your contribution? This can be a tax effective way of giving your superannuation a boost, so with this in mind, here are a couple of things to consider:
Salary sacrificed contributions – the benefit of these are that they come out of your pre-tax salary. If you contribute $1,000 p.a into superannuation, the net difference to your monthly take home pay is only around $50!
- Personal deductible contributions – personal deductible contributions are contributions by the self-employed from pre-tax income. It is worth noting that there are specific rules to be able to make this type of contribution and it is not available to everyone; and
- After tax contributions – the benefits of these contributions are:
- they have a higher cap, allowing you to get more in to superannuation quickly;
- they can have better tax treatment when you retire; and
- they will be tax free when left as part of your will.
Please note you will not receive a tax deduction for the contribution, however, the fund will not pay tax on the contribution when you make it.
Note: There other criteria that may need to be met to contribute to superannuation. If you are considering any of the above contribution strategies, please feel free to contact one of our iSUPER® team to discuss.
3. How are fees affecting your retirement balance?Many clients forget to consider the fees you are paying as part of your fund’s overall performance. Fees have a direct impact to the bottom-line of the fund, the higher the fees, the less money you have working for you. Over time this can result in a significant difference to your retirement balance. Addressing this now could save you tens of thousands over the life of your superannuation.
4. Are you at risk of losing your tax deduction for contributions?If you are claiming a tax deduction for superannuation
contributions, it is possible that the ATO can reverse the deduction if you get it wrong. Here are a couple of ways to make sure you do not miss out:
Personal deductible contributions – you need to make sure the paper work is in order. Getting this wrong can cost you the deduction and paying more tax personally.
- Employers – you need to pay employees superannuation by the due date. If you pay superannuation late, you may lose the deduction and get penalties.
In both cases, it is all about timing. If you pay contributions as an employer, or are self-employed, give us a call and we will happily guide you through what dates are relevant to you.
5. Have you considered holding your business premises in an SMSF?The superannuation rules allow an SMSF to rent real business property to a related party. This means you can potentially operate your business out of property owned by your fund.
There are strict rules that you need to follow, however, ultimately it means the rent you are paying is going towards your retirement, not someone else’s.
6. How can selling your business grow your superannuation and reduce tax?With the new lower caps on contributions, getting money into your superannuation fund is becoming increasingly difficult. However, if you are considering selling your small business, you may have an opportunity to get more into superannuation and reduce the tax on the sale of the business.
7. Where does superannuation fit into your overall plan?
One of the main benefits of superannuation is, it is taxed at a lower taxation rate. Where you have the ability to include superannuation as part of your investing strategy, it should allow you to reduce the overall tax you pay.
This can be particularly attractive as you approach retirement age, where you are able to access your superannuation.
8. Structuring superannuation for your family?Having the correct structure in place can provide you with more certainty around estate planning and protecting your superannuation benefits when passing it to your children.
Things such as valid binding death nominations and reversionary pensions can be simple ways to ensure you protect your superannuation benefit when passing it to your dependents. Once again, the devil is in the details!
If you would like to know more about the above strategies or other strategies that can grow your retirement benefit, please feel free to contact one of the iSUPER® team to discuss.