Why should I get superannuation?

like some of the others have said, people lose confidence in putting everything into super because the govt continues to change the rules.
plus it depends on the individual and their age/circumstances. for many its compulsory to contribute via the employer.

my opinion is to have a range of investments property/shares and contribute to super. we prefer to keep things simple. we have had financial planners with plans/fees etc over the years, now we seek advice when we need it, tax/legal etc.
some maybe hoping/expecting to inherit so then their financial plans are irrelevant because their future needs are assured?

its an individual decision.
 
On another note, why is superannuation not compulsory for self employed people, don't they age?

Politicians and parliamentary retirement benefits probably need review also?
 
On another note, why is superannuation not compulsory for self employed people, don't they age?

Politicians and parliamentary retirement benefits probably need review also?

The best one is the judiciary. Did you know that some of the rules for super don't apply to them - Including some tax law !! ...Its a constitutional issue. Outrageous really. Every Govt that tries gets blocked by the judiciary going to the HC. (The animals in the zoo making their own rules)
 
The superannuation system needs examination and reform but the government won't touch it, says BusinessDay colunist Michael Pascoe in this video. Super's endemic failure
 
On another note, why is superannuation not compulsory for self employed people, don't they age?

Super is set at 9.5% of wages. Not every self employed person pays themselves a wage (nor is it desirable for some small business owners to do that).

For some self employed people, the value of their business, if able to be sold/monetised, will effectively fund their retirement, provided when they do contribute to super they've satisfied the contribution work tests. It is then possible to get $1.5 million into super in a very short space of time, however this applies to everyone - example:

Couple over 50 contribute $35k each in deductible contributions and $180k each in non-concessional contributions on 30 June. Then on 1 July again contribute $35k in deductible contributions and $540k each under the 3yr bring forward provisions.

Combined with rollover reliefs for small businesses there's great scope to minimise and avoid taxes completely in retirement.
 
On another note, why is superannuation not compulsory for self employed people, don't they age?

Politicians and parliamentary retirement benefits probably need review also?

Structure business so that no salary is paid. If no salary, then also no worksafe, no super, no misc other stuff.
 
Structure business so that no salary is paid. If no salary, then also no worksafe, no super, no misc other stuff.

Dangerous thinking DT - if the business "employs" anyone other than themselves as a sole trader/partnership, they will need to have workers comp insurance as they are not the entity if it is a pty ltd company.
 
My brother are I have agreed that I will take half of the value of the family trust. As part of that process I "could" move a house from the name of the family trust and put it in my name. This will push me into land tax territory (part of the reason we are splitting up the trust)..
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4. If this is held long term, and goes to my (our) children, do they pay capital gains tax?

Be careful - making agreements like that could be a CGT event.

Perhaps 2 separate trustees could own the house to keep each half under the threshold.

A SMSF is a trust so when a member dies the trust assets (i.e. the house) doesn't to to anyone. It stays in the trust which continues as before. But the rules are that the trustee must pay out the member benefits of the deceased - to either a dependent or to the legal personal representative. This will mean the house will probably have to be sold unless the fund has enough cash to keep the house and pay the cash out.
 
Terry do you mean we could be up for capital gains tax on the house I am taking from the trust? We have taken that into account. We also must pay transfer duty. If the house wasn't worth holding long term we would sell but then instead of paying transfer duty to put it in my name I would pay it for another house.

If that is what you mean then we are ok taxwise as there is no gain on this property from when it went into the trust (capital gains tax was paid at that time and new cost base set). It will help offset the gain on one we sold last month and we have gone through the figures with our accountant.

We looked at holding it in two entities but after taking advice it seemed it was easier and cheaper to hold in my name for quite a few years.

Re SMSF - I naturally want to minimise tax going forward but the mess and work involved in untangling this trust makes us realize we want to keep things as simple as we can so our kids don't have similar issues to deal with one day.
 
Terry do you mean we could be up for capital gains tax on the house I am taking from the trust? We have taken that into account. We also must pay transfer duty. If the house wasn't worth holding long term we would sell but then instead of paying transfer duty to put it in my name I would pay it for another house.

No, I meant if your agreement takes the form of a sub trust, or if you or your brother 'bought' the other out of the trust.

I hate to see someone wind up a testamentary discretionary trust. Hope you have sought proper advice.
 
That's the thing..Why put money away to access it at 70? What am I gonna do with 500k at that age? Can it be accessed earlier?

The way I see it is yes there are tax benefits, but other than that, what's the benefit of having so much money locked away until I'm old and my body can barely move anymore... I figured i'd just use all that money that's meant to go to super..

I'm still waiting for that lightbulb moment when someone comments and convinces me I should get super..If I'm not successful and have enough to chill by the time i'm 70 then I deserve to be on the pension.

That's just it if ALL wish to be on pension, who will support that pension and what it will be? What if there was no pension what then? Imagine your lifestyle then... Assume you are accustomed to living on $50K yet when you go on pension may end up to live on $16K suddenly? Also, assume you may be the one requiring more assistance in terms of health as you get older, so why leave it to government to decide to look after your life when you may be most vulnerable?
It takes different philosophy, a change in mindset, an attitude where "If you could do more should you, especially for your retirement?".
I believe Super is there to supplement you in your retirement, so my suggestion to the young would be to start accumulating and getting wealth first outside, then have a plan to supplement your Super.
I wouldn't invest first into Super, if I have no investments outside as yes rules can change, but haven't they changed so far ALL the time and for any entity structure we invest to?
So since no one has a crystal ball into any rules and regulations why not take the ownership of one's financial independence, and Super certainly falls into it as part of an overall financial investment plan.
As others have mentioned, it provides protection from litigations too... All your assets could be confiscated while those in Super would be protected (as a general rule when structured correctly there!).
I rather choose my own retirement than hope for the government to provide one for me!:)
 
I've never had a job in Australia lol

Congratulations, you are then a true capitalist, right?:D
Some don't understand it, that sometimes it is better to earn profits rather than work for salary and wages.....? (it took me sometime to understand the difference as profits can be unlimited or increased in multitude ways whereas how easily can one double, triple, increase 10 fold, 100 times more their salaries or wages????).
It is simple to understand but it doesn't mean it is easily achieved!
 
On another note, why is superannuation not compulsory for self employed people, don't they age?

Politicians and parliamentary retirement benefits probably need review also?

Totally agree with you on this, especially the second point! Aren't we all Australians so why we have different Super rules for politicians as compared with ALL Australian citizens? I always ask that, yet not many people ask to question this, why?:confused:
 
Why put money away to access it at 70? What am I gonna do with 500k at that age?

These sorts of statements about super are common. It is true to an extent )(its currently 55-60 before you can access) but:

1. If you knew you were going to get access to a large sum of money at X years of age this would allow you to 'retire' earlier as you could draw down on your capital outside of super.
2. Many investing to pass on to children and others
3. Super is accessible if a member suffers a permanent or temporary incapacity.
4. Super survives bankruptcy, usually. i.e. good asset protection. Many business people end up bankrupt at some stage - but many of these don't have any super which could be protected.

Super is a low taxed environment where you could be taxed at 10 to 15% instead of 47%. You can imagine how much you could grow capital if you saved 32% in tax each year. Compounding over 30 years.~
 
These sorts of statements about super are common. It is true to an extent )(its currently 55-60 before you can access) but:

1. If you knew you were going to get access to a large sum of money at X years of age this would allow you to 'retire' earlier as you could draw down on your capital outside of super.
2. Many investing to pass on to children and others
3. Super is accessible if a member suffers a permanent or temporary incapacity.
4. Super survives bankruptcy, usually. i.e. good asset protection. Many business people end up bankrupt at some stage - but many of these don't have any super which could be protected.

Super is a low taxed environment where you could be taxed at 10 to 15% instead of 47%. You can imagine how much you could grow capital if you saved 32% in tax each year. Compounding over 30 years.~

What's the earliest age I could access it? What if I stop working at the age of 45 due to having a substantial amount of passive income in my field. Can I access it then? I wanna learn a bit more about the tax and should probably sit down with a good accountant to crunch these numbers.. Anyone know one in Western Sydney who also likes investing in property?
 
What's the earliest age I could access it? What if I stop working at the age of 45 due to having a substantial amount of passive income in my field. Can I access it then? I wanna learn a bit more about the tax and should probably sit down with a good accountant to crunch these numbers.. Anyone know one in Western Sydney who also likes investing in property?

You could access it at 30 if you meet a condition of release such as temporary or permanent disability. But generally it would be 55 to 60 depending on your age.
 
What's the earliest age I could access it? What if I stop working at the age of 45 due to having a substantial amount of passive income in my field. Can I access it then? I wanna learn a bit more about the tax and should probably sit down with a good accountant to crunch these numbers.. Anyone know one in Western Sydney who also likes investing in property?

You're obviously pretty young judging by your comments regarding making 70 sound like it's game over (I'm taking a stab at 26 based on your username?), you'll realize however, that as you age "old" becomes relative. I'm about to hit 40 and used to think 70 was ancient. I have friends in their 70's now though, and they are far from old. I would HATE to think I was turning 70 and broke, I intend to travel the world, eat and drink well and enjoy many fun filled years well passed 70 thank you....

We put a little extra into our Super. We had no pensions as such in the UK and started paying into Super when we started work here 7 years ago. Emma gets an additional 2% paid into hers by her employer as long as she contributes an extra 3%, so there's 14% going in of a decent salary. I get the standard 9.whatever % plus I've been adding a bit every pay for the last few years and increasing that each year too. Something I don't miss, but 7 years in our pot is starting to look quite nice and if we keep going the way we are it will be a nice bonus come aged 60+

As others have said, good safety net too. If we balls up completely in the mean time at least we'll have something for bread and gruel in our twilight.

When you first start it seems like nothing is going in, and nothing is really happening but boy do the years pass quick, and once that pot has grown a bit the magic of compound interest starts to do the heavy lifting for you.

I'd say get into it.
 
Super is set at 9.5% of wages. Not every self employed person pays themselves a wage (nor is it desirable for some small business owners to do that).

For some self employed people, the value of their business, if able to be sold/monetised, will effectively fund their retirement, provided when they do contribute to super they've satisfied the contribution work tests. It is then possible to get $1.5 million into super in a very short space of time, however this applies to everyone - example:

Couple over 50 contribute $35k each in deductible contributions and $180k each in non-concessional contributions on 30 June. Then on 1 July again contribute $35k in deductible contributions and $540k each under the 3yr bring forward provisions.

Combined with rollover reliefs for small businesses there's great scope to minimise and avoid taxes completely in retirement.

Or they get to age 58 and find the business implodes and their decision not to contribute, as their business is their super, means they are without retirement savings. Unfortunate for each person who does use the small business concessions and thump their caps you also hear of those who avoided the issue and have no super. Common for small businesses that cant be sold.
 
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