News Update
News Update 31 August 2009
Prudentia Financial Group
New super and retirement strategies
The 2009 Federal Budget announcements regarding superannuation and social
security are now law and are effective in most cases from 1 July 2009. Read
on to see how they affect your strategies and what you can do to make sure
you are best placed to take advantage of them.
Salary sacrifice or co-contributions?
Clients earning up to $61,920 in 2009-2010 may believe that
their most effective super contribution strategy is to receive a Government
co-contribution. However, depending on the client's situation, salary
sacrifice contributions alone or a combination of the two may provide
greater net contributions.
If the client is eligible for the co-contribution but is on the 15%
marginal tax rate, then the co-contribution will always provide greater net
contributions than an equivalent salary sacrifice contribution.
A client on the 30% marginal tax rate will have a better outcome using a
co-contribution strategy only when their income is less than a certain
level. The level depends upon the client's marginal tax rate, the amount of
the non-concessional contribution they plan to make and the co-contribution
rates and thresholds.
Both salary sacrifice and co-contribution
In many cases, it is likely that the client could benefit from a strategy
involving a combination of salary sacrifice contribution and
co-contribution.
The optimal split of contributions - between salary sacrifice and
non-concessional / co-contributions-for a particular client depends on a
number of factors.
If you are contemplating additional contributions to super this financial
year you are best advised to do a proper analysis of the alternatives.
Mark Gashi
CA F Fin SSA
"Always invest with Prudence"
The information in this update is intended to be general in nature. No
reference to securities should be construed as advice. The update has been
prepared/given without taking into account your particular investment
objectives, financial situation and particular needs. Before making an
investment decision, you should assess whether the desired course of action
is appropriate to your investment objectives, financial situation and
needs. You may wish to make this assessment yourself or seek the help of an
adviser.
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