The changing super rules provided impetus for a massive inflow of money into superannuation over the June quarter. In fact, total superannuation assets increased by 14 per cent or $72 billion over the June quarter - the highest quarterly increase ever recorded.
Thousands of Australians poured money into super to take advantage of the opportunity to contribute up to $1 million in after tax dollars into super before the gates closed on 30 June. ASFA said the total additional contributions of $14 billion over the quarter exceeded their expectations.
While the million dollar opportunity may have closed, Australians can still convert taxable assets into a tax-free retirement stream with some forward planning. The limit on after-tax super contributions has dropped to $150,000 a year. But, you can make a single lump-sum contribution of $450,000 by bringing forward the next three years' contribution.
People planning to retire who might have assets outside of super, like property and share investors or business owners, will now need to be more careful about how they structure their contributions in the lead up to retirement. This means some people may need to stagger after-tax contributions so they don't exceed $450,000 in any three year period. Of course, the relevance of this strategy will depend on the amount of assets you have.
You can make after-tax contributions to super if you are aged under 65, or between 65 and 75 providing you pass the work test. This means you must have worked 40 hours within a 30 consecutive day period in the current financial year. People aged over 75 cannot contribute.
With a little more planning many Australians will be able to convert their taxable assets into a tax-effective income stream when they retire. The great thing about converting taxable assets into super is that when you retire you can access your money as a lump sum or pension, tax-free. And, the less tax you pay the more money you end up with in your pocket.
22nd-September-2007 | 
