Ask Melanie | Calling all retiring types: make sure your superannuation fund stays super
Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send your questions to melanie.nutbeam@hfs.com.hk
Yes, transferring retirement capital to a superannuation fund can be a highly effective strategy for anyone retiring to Australia. Income tax rates stand to be cut from as much as 46.5 per cent to nil.
Advance planning harvests maximum benefits. That's because the transfer of capital to a superannuation fund has age and work-based eligibility requirements and annual contribution limits. Basically, anyone under 65 and working can transfer A$150,000 (HK$1.2 million) to their superannuation fund each tax year (ending June 30), tax-free. Alternatively, A$450,000 can be contributed prospectively for a three-year period. That's per adult taxpayer so a husband and wife could contribute A$300,000 per annum, or A$900,000 in one hit to cover the next three years. If your annual allowance isn't used, it's lost.
You can choose the fund and the most convenient is usually a public offer fund where your account is separate but administration and compliance costs are shared across all fund members.
Wide underlying investment choice is available across asset classes and global markets. Earnings you achieve within the fund will be determined by returns on your investment choices and the costs of running the fund. Income and gains from investment of your capital will be taxed within the fund at up to 15 per cent but careful management can reduce this to about 5 per cent per annum. This minor tax niggle stands as a small insurance premium against otherwise potentially hefty taxes later.
Your assets (member benefits) remain your own within the fund and a nomination of beneficiaries notification can be lodged to ensure fund trustees pay all benefits to your beneficiaries or estate, on death.