What are the key benefits of superannuation?

Superannuation provides the following key benefits:

Savings accumulated within a superannuation structure is one of the most practical ways to accumulate funds for the future.  Significant tax benefits apply as income earned within is taxed at a maximum rate of 15%.  This is low compared to the highest marginal tax rate (plus Medicare levy) which is 49% for the 2016 financial year. The government offers such significant tax incentives to encourage Australians to save for their own retirement.

• Via a salary sacrifice strategy, contributions made pre-tax direct from your employment income will be taxed at only 15% for those with an adjusted taxable income of less than $300,000 per annum.  From there, the tax rate increases to 30% which is still lower than the alternative of receiving income in your individual capacity in which case income tax of up to 49% may apply.
• Superannuation is effectively a legal ‘tax shelter’ underwritten by the Australian Government, for those who choose to utilize it as a savings vehicle.
• Superannuation allows you to diversify your investments as much or as little as you like.  You are free to manage your portfolio yourself or outsource the management to professionals.  It’s your money, so you are left free to make whatever decisions you like so long as you abide with the relevant legislation surrounding superannuation – however complex it may be!
• In the event of a bankruptcy, any balance held within superannuation is generally protected from creditors.
• A superannuation balance can be converted to a tax effective income stream once a condition of release is met and or the superannuant has reached their preservation age.

What are the benefits of a superannuation income stream?

Ever since the introduction of superannuation income stream in Australia, commencing an income stream upon retirement has provided significant income tax and retirement planning benefits.  The government continues to tinker, but there are few better ways to fund ones retirement income needs at this point in time.

The reason income streams are so popular among retirees is because it allows you to reduce any associated tax as follows:

• Upon commencement of an income stream, associated investment earnings and realized capital gains are taxed at 0%.
• Between age 55 and 60, income paid to the pensioner is tax effective in that part may be tax free, whilst any taxable component also attracts a 15% income tax rebate.
• From age 60, all income drawn down from a superannuation income stream is received 100% tax free.

To learn more about superannuation and income streams, it is advisable to consult a suitably experienced and certified financial planner.

Battistella Financial Services can assist you with any queries you may have, and would be delighted to meet with you’re to discuss your requirements.

There are literally thousands of superannuation funds to choose from, and we can assist you to find the most appropriate fund for your requirements.

Please get in touch with us should you require our assistance.