There has been some talk of restricting the TTR strategy as it can provide a significant benefit and is reducing the Governments tax take. Therefore, if you are 55 or over, it would be wise to consider the TTR strategy as soon as possible to see if it could benefit you personally. Once your TTR is commenced it would be unlikely that any ATO changes would be retrospective.
From the 1st July 2012 the maximum concessional contribution into Superannuation has been reduced from $50,000 down to $25,000 for people aged 50 and over. The TTR strategy is most effective when combined with maximizing concessional superannuation contributions.
With the limit now $25,000 is TTR still viable? - Definitely
• From our analysis the TTR strategy is still a great idea as it helps reduce tax on salary sacrifice contributions up to a maximum of $25,000 (including employer contributions).
• In addition the tax rate on superannuation accumulation account is 15% (on income and realized capital gains) and for a TTR pension account the tax rate is reduced to zero.
• Paying no tax on the returns generated by your super pension account could be a significant benefit. This will effectively mean higher net returns in the pension account when compared with the same investments in a superannuation accumulation account.
Who can benefit from the TTR Strategy?
• People 55 and over can commence a TTR pension.
• People with higher superannuation account balances can generally benefit more as once their accumulation account is converted to pension account the tax rate is reduced from 15% on the account earnings down to zero percent.
• People who may be selling assets owned in Superannuation and may pay capital gains tax in accumulation account – would pay no tax in pension account.
• People considering working part time on a reduced salary can top up their income with tax effective superannuation pension payments and tax free from aged 60.
