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You are able to implement specific investment strategies that are tailored to your requirements and needs. Whilst there are set regulations and investment criteria that must be considered and adhered to, you essentially have control over the underlying investment selection of your superannuation entitlements. Your SMSF could also make a larger investment in assets such as shares and property by using cash in your fund and borrow the rest.
Other tax advantages include:
Once the superannuation fund is paying a pension, the fund becomes exempt from tax. As such, all income and capital gains that are made by the fund are not subject to tax. You pay tax when you draw out your superannuation pension each year.
When you draw a pension from your superannuation fund, you can use an allocated pension. This means that your superannuation is allocated over your life expectancy. You are required to draw down a minimum pension and a maximum pension each year. You can also draw a lump sum, or a combination of the two. Your circumstances at the time of withdrawing your pension need to be considered before withdrawing any funds either as a pension of a lump sum.
The management control and flexibility generated through a SMSF continues to provide benefits when you commence drawing a pension. A SMSF provides flexibility and control over the investments that are utilised to provide a pension, and the manner in which the pension is drawn.
From 1 July 2007, if you are over the age of 60, any pension that you draw from superannuation is tax-free. As a result, there is more reason to keep your options flexible and enable you to take a tax-free pension upon retirement. New announcements were made in the May 2016 Federal Budget that may limit the value of assets held in your pension account to $1.6m. This is not yet law, so may not be passed.
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