27th March 2007
Superannuation News – New Retirement Rules
Paul Franklin our financial planner provides the following brief summary of the new retirement rules. Further information can be obtained from Paul on 02) 9909 1499.
More importantly you should consult your accountant for information on how these new rules affect you personally.
New Retirement Rules
1) No tax on lump sum or Allocated Pension retirement payments after age 60 regardless of the sum accumulated or level of pension received each year. (The R.B.L. abolished).
Generous taxation concessions on lump sums and pensions for ages 55 to 60 will remain unchanged.
2) Funds can be held in a super fund until any age with partial or full withdrawals being allowed, after retirement, completely tax free (after age 60). The compulsory cashing rules for ages 65 to 75 no longer apply.
3) Allocated pension fund earnings to remain tax free whereas super funds continue to pay up to 15% earnings tax. Allocated Pension minimum draw downs are being reduced to approximately 4% of total funds invested dependant upon age in pension year. Allocated Pension payments will no longer have to be declared in the recipient’s tax return which will improve taxation offsets for retired persons.
4) New Contribution Rules
For super fund members over age 50, ongoing tax deductions of $100,000 for five years per person from 1 July 2007 ($105,113 deduction this tax year). For persons under age 50 they now can receive $50,000 100% deductible contributions per year whether paid by the employer or as a self employed person.
5) A once only $1,000,000 undeducted contribution (per person) into super from now until 30 June 2007.
6) Ongoing undeducted contributions of $150,000 after 1 July 2007 with people under age 65 being able to make a $450,000 contribution in lieu, once every three years.
7) A $1,000,000 once in a lifetime contribution from the sale of a small business asset held for 15 years.
8) Contributions can continue as tax deductible until age 75 subject to minimum work hours.