Try superannuation hints

The analysts at Colonial First State Funds Management have put together a few hints regarding superannuation.

Some of these are reproduced below. In subsequent columns we will examine others and their relative merits.

• Spouse contributions: as an alternative to non-super investments, spouse contributions are extremely valuable. For those on high incomes, this

strategy can quarantine the tax on earnings to a maximum rate of 15 per cent. Since contributions are classified as undeducted contributions they then do not count for RBL purposes.

• Minimising superannuation surcharge liabilities: my views on the lack of logic attached to the superannuation surcharge have been expressed before. The only way to minimise the liability is to reduce taxable income by means other than salary sacrifice. Negative gearing, where the interest expense is claimed as a deduction against the assessable income, is one way to reduce taxable income and thus reduce the surcharge liability.

• Spouse contributions for death/TPD policies: far too often we see spouses with minimal life or disability cover. It is possible to establish a policy through a spouse contribution fund with an annual, rebatable $3,000 contribution being made. This has the double benefit of reducing taxation liability by $540 and provides life cover for your spouse.

• Rising RBL indices: each year on 1 July, the RBL indices are indexed to AWOTE. It may be beneficial in some years for retirement to occur after 1 July. There are also taxation advantages that accrue on other payments such as long service leave.

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