Set and for­get through su­per

Sam is the CEO of fi­nan­cial plan­ning firm Hen­der­son Maxwell and host of Sky News Busi­ness’s Your Money Your Call – Su­per

Money Magazine Australia - - ASK THE EXPERTS - SAM HEN­DER­SON

Jody, it sounds like you’re truly liv­ing the life­style and fi­nan­cial dream. You’re not pay­ing a cent in tax from your su­per and you have plenty of money to sup­ply you with an in­come stream, most prob­a­bly for life.

Hav­ing spent a lot of time surf­ing my way around the In­done­sian ar­chi­pel­ago, I can at­test to the beauty of the place and many oth­ers just like it, so good on you!

The other im­por­tant as­pect to your sit­u­a­tion is that be­cause you spend a lot of time away from home, your re­quest for a set-and-for­get strat­egy plays nicely into the hands of investing most of your hard-earned dol­lars in su­per­an­nu­a­tion.

I think this is good idea be­cause in Aus­tralianSu­per it’s well in­vested, has per­formed well and is a low-cost op­tion. Let’s not fix what ain’t broke!

I man­age self-man­aged funds for clients with sim­i­lar amounts and they en­joy the trans­parency and flex­i­bil­ity of the SMSF struc­ture, not to men­tion the po­ten­tial to in­vest in prop­erty. You’re prob­a­bly even not an Aus­tralian res­i­dent for tax pur­poses if you spend so much time over­seas so an SMSF won’t be rec­om­mended, as cen­tral man­age­ment con­trol needs to stay in Aus­tralia.

Your needs are re­ally sim­ple. De­spite hav­ing five times the av­er­age amount in su­per at re­tire­ment it doesn’t mean you have to have more com­plex­ity. I’m a big fan of keep­ing things sim­ple. The same ap­plies to your share portfolio. If I were you, I’d prob­a­bly sell it down and make a non-con­ces­sional con­tri­bu­tion to su­per (of up to $300,000) and po­ten­tially use a con­ces­sional con­tri­bu­tion or part thereof if you have a cap­i­tal gain on the sale – this will keep the CGT to a min­i­mum. Al­ter­na­tively, you can sell pro­gres­sively across a num­ber of fi­nan­cial years to lower your tax­able gain. It’s im­por­tant to seek ad­vice from an ac­coun­tant on this point.

Leave an amount you feel com­fort­able with as a cash buf­fer for emer­gen­cies and put the rest into su­per, where it will be man­aged by AussieSu­per. Man­ag­ing the shares your­self will re­quire more work and ex­per­tise and your life­style sounds more like a pri­or­ity than sit­ting in front of a screen trad­ing shares.

One fi­nal point I’ll make re­lates to the $1.6 mil­lion pen­sion bal­ance trans­fer cap. I’d sug­gest en­sur­ing that the su­per is split be­tween you fairly evenly so that one part­ner doesn’t hit that cap.

This can be eas­ily done given your age and the con­tri­bu­tion lev­els avail­able, and be­cause you’ve al­ready at­tained a con­di­tion of re­lease you can take money out of one per­son’s ac­count and put it into the other’s (up to $300,000 each as a non-con­ces­sional con­tri­bu­tion us­ing the three-year bring-for­ward rule) to re­bal­ance the amounts.

Just make sure your bind­ing death nom­i­na­tions are kept up to date, your wills and pow­ers of at­tor­ney are com­plete and avail­able to each of you and other fam­ily mem­bers. Apart from that, let’s keep it as sim­ple as pos­si­ble and keep the wind in the sails.

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