Basics about Super – How to succeed to invest INSIDE or OUTSIDE Super?

Basics about Super – How to succeed to invest INSIDE or OUTSIDE Super?

Basics about Super – How to succeed to invest INSIDE or OUTSIDE Super?

How can we know what will succeed, or give the better result?

The question is –

Do we invest invest inside or outside super?

Moving investments from outside your super into a Self-Managed Super Fund (SMSF) could produce significant results due to the tax benefits of super.

It can depend on several factors, such as your income tax rate. Lets look at an example both outside and inside super and the tax consequences –

For example OUTSIDE super

Let’s say you have investments in your personal name valued at $300,000.  If you are on the top marginal tax rate of up to 45% (2019) that will be calculated on the income and capital gains generated by the investments, above your regular income.  Assuming an investment income return of 3% per annum, this will give you $9,000 income – at the top tax rate, this could raise $4,500 in tax per annum payable on the extra investment income.

Worse still, assuming the investment doubles every 10 years (a generally accepted investment principle) the capital gains tax bill on sale would be approximately $67,500 (the extra $300,000 gain by 45% with 50% Capital Gain deduction, rounded).

Even if you don’t plan on selling the investment, eventually the investment will be sold even if your beneficiaries sell it after you pass, and the tax bill will still be there.

For example INSIDE super

Alternatively, transferring the investment into your SMSF (noting certain transfer  restrictions), or purchasing with super money in your SMSF, the tax on the annual investment income will fall to $1,350 per year (super tax is 15%, so $4,500-$1,350 is a tax saving of $3,150 each year).

Then, later, after you commence a Pension the tax rate is 0% (a tax saving of $4,500 each year – all! – Note within the Pension Account max Cap. Of $1.6mill in 2019).

In addition, while in pension, there will be no tax on the capital gain in your SMSF if the investments are sold after you commence a Pension. This can equate to a tax savings exceeding $100,000 depending on the period viewed!

Got questions? Why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today

Also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above.

About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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