Category: Superannuation

This month we discuss the circumstances under which inactive and lost super accounts can be transferred to the Australian Tax Office (ATO).  

The Superannuation Guarantee (SG) legislation requires employers to pay a minimum of 9% of its employees' ordinary time earnings as super (up to $45,750 per quarter) which in turn can be claimed as a tax deduction.  SG contributions must be paid for employees who are at work or on leave, such as paid sick leave, long service leave, annual leave and workers’ compensation (in some circumstances).  Under the legislation, SG contributions do not need to be paid for employees who are:

Whether an individual should allocate excess cash flow to their mortgage or make concessional super contributions depends on various factors. Principal considerations include the individual’s tax rate, liquidity needs, cash flow position and risk tolerance. Before analysing these considerations, we will briefly outline the tax benefits of topping up super compared to making extra home loan repayments.

It is becoming mainstream knowledge that superannuation funds can borrow under certain circumstances.  However, what is less known is that the relevant legislation does not stipulate where the money can be borrowed from.  As a consequence it is possible for a superannuation fund member or their relative etc to lend money to their fund.  This is particularly effective for acquiring assets that banks are not generally willing to lend for such as equities (shares) and/or if the superannuation fund wants to obtain cheaper funding. 

Superannuation as an estate planning asset is often overlooked.  This is despite superannuation becoming the largest retirement investment vehicle, while also frequently holding life insurance payouts.