Information You won’t get from Unlicensed Accountants #9
Along with this raft of legislative change, the Australian Securities and Investments Commission (ASIC) has also introduced new licensing requirements for accountants who work with and advise Self Managed Superannuation Fund (SMSF) Trustees. Only approx. 10% of accountants have complied with these changes to date.
As such if you, as many, consider your accountant would be your 1st port of call for Financial Advice, they will likely advise you, they are unable to provide the information you require & should consult a qualified Financial Adviser / Planner.
This is general advice only and you should seek expert financial advice from a qualified financial adviser before acting on any of the information covered in these topics.
Why Super is ‘Super Duper’
At any point in time, superannuation is likely to the most tax effective structure for Australian investors. However, after the age of 50 it should be given special attention. This is because from the age of 65 (and in certain cases age 60), assets held in the superannuation environment may be completely free of tax, up to $1.6 million, and possibly higher. This is compared to Marginal Tax Rates (MTR) of up to 45%, plus the 2% Medicare levy, for individuals earning over $180,000.
For example, take an investor aged 50 who is deciding whether to purchase growth assets (e.g. shares or property) in their personal name or inside superannuation. If the investment generated an assessable capital gain of $250,000 in the investor's personal name, a tax liability of $58,750 would be incurred (assuming highest MTR and 50% CGT discounting applied). Alternatively, if the asset was held in the pension phase of superannuation (available for most from age 60 and definitely from age 65), no tax would be payable.
Given the sizable tax savings that can be generated, investors moving closer to retirement whose financial circumstances can tolerate locking up savings in superannuation until retirement should be asking themselves “should I purchase this asset inside superannuation?”.
Investors need to understand, they make their profit at the exit point from an investment, not the entry point.
As William Feather said “One of the funny things about the stock market is that when one person buys, another person sells, and both think they are equally astute.”