High Net Worth Super Contributions
Some individuals and couples are lucky enough to be ranked as “High net worth” as a result of years of hard work. This specific demographic however has more challenges than you may think, without the right assistance these challenges can significantly hurt your potential effectiveness of those hard worked years.
Throughout this article we will refer back to a recent article published in the AFR which features John Wasiliev, a veteran SMSF specialist and has provided answers to readers’ questions on superannuation for decades.
Hold off on starting your pension from your super
John was asked a question regarding a high net worth couple that were looking to contribute to the Super in a tax efficient manner. Giving context, this couple had $1.7Million in each of their SMSF, and also received $400,000 in cash as a result of stocks from selling their business, which they owned for 26 years. John states that age plays a very important factor when looking to satisfy the work test, this is important as the proceeds can be handled in a tax efficient manner if they are still considered employees, the proceeds are then considered an employer contribution of up to $27,500 reducing the profit, thus reducing the tax payable.
This highlights just how important tax structures can be when looking to minimise tax and progress your road to retirement. John writes that by holding off on starting your pension from your super fund it could be extremely beneficial in the long run, providing a couple things go your way. The best time to start a pension from your super would be after July 1st. This is due to the potential increase in the transfer balance cap, increasing from $1.7Million to $1.9Million. Meaning this high-net-worth couple could potentially make $200,000 after tax contributions. The only risk in this procedure is if the number is frozen at $1.7Million instead of the increase to $1.9Million due to inflation.
At Yield we have clients that also fall under the high-net-worth status, these clients should definitely keep these factors in mind when looking to open a pension account or looking to explore their options to enable retirement.
Effective use of land
John also touches on the extended land use test and effective use of land, he claims the full value of a property can be exempt from pension asset tests, however, all criteria must be satisfied. You must also have reached the age pension age or be in the process of applying for the age pension. A land’s ability to potentially earn an income can be a hazard, especially when assessed by Centrelink. John provides numerous cases where land has been deemed possible to earn an income when being assessed by Centrelink. This results in some couples not being able to access the age pension, a huge factor when looking to retire. It is recommended that if you are looking to value your property to seek advice and valuations from experts with your best interests put first.
How Yield can provide assistance
As previously mentioned, Yield has numerous high-net-worth clients, and we are very adept in ensuring they have a plan that is tailored to their needs and values. Whether it be tax efficiency, property assistance, retirement planning, and many more. We have some of the best advisers in the industry that have been around the block a few times before, reassuring you on the progress of your plans and how you are tracking towards your goals.
If this sounds interesting to you feel free to reach out to us here, and we look forward to speaking with you soon.
