PROFESSIONAL SERVICES 17
EASTERN SUBURBS
DOWNSIZING & SUPERANNUATION
Your Friendly Funeral Guy®
Chris Cullen
what you need to know
“You’ve made my day” said one lady at the Double Bay Street Festival. Why? Because we were displaying a “Pandanus” wicker casket (pictured).
In fact, we received a wide variety of reactions from horror (“oh dear, that’s a coffin”) to genuine appreciation (“its got so much more soul than a traditional coffin”). Several of the festival goers drew my attention to the fact that a similar wicker casket was featured in "Australian Story" just a week earlier. The "Australian Story" episode was talking about businessman and farmer Tony Coote, who was buried in a wicker casket made from willow. You can watch the episode entitled “Hope Springs” on the ABC on iview or: https://iview.abc. net.au/show/australian-story/series/0/ video/NC1802Q029S00 Our wicker caskets are hand woven in Indonesia by World Fair Trade Organisation approved artisan craftsmen. This means that the people who make our caskets are paid a fair wage for the work they do. The Pandanus and the other caskets in the Greenature range are made from carefully
collected mature leaves from the banana and pandanus plants in the wild so that they continue to regenerate. The dried, sustainable fibres are then hand twisted and braided into a rope. This is skillfully woven over the frame to create an elegant wicker casket. See the other caskets in the Greenature range...https://scientia.com. au/our-range/greenature/ The natural and organic materials of the Greenature range of caskets are eco-friendly, suitable for both burial and cremation and comply with Australian Standards. At Ian J. Arthur & Sons if you would like to explore eco-friendly options for your funeral requirements we welcome the opportunity to talk with you. Please feel free to contact me for a noobligation discussion on 1800 202 110 or by email to chris@ianjarthurfunerals.com.au
Do you have a question for the Friendly Funeral Guy®? I would love to answer your questions in future editions of the Eastern Suburbs Life newspaper. Please email them to: chris@ianjarthurfunerals.com.au
Ian J. Arthur & Sons
Suite 6/712, New South Head Rd, Rose Bay 1800 202 110 24hrs, 7 days www.ianjarthurfunerals.com.au
You can now take advantage of generous concessions which allow you to channel profits from the sale of your family home into super. The downsizing concession is pegged at $300,000, so you can put that amount into your fund and if you draw your super as a pension, you pay zero tax. If you are in the accumulation phase of superannuation, earnings that accrue on this amount are taxed at up to 15% rather than your marginal tax rate which could be higher. The downside is that you could lose all or part of your pension.
The money or the box?
A lot of older Australians who have kept jobs and paid their taxes for half a century feel a sense of entitlement about the old aged pension. It’s all too easy to understand when they see people who spent those same 50 years on Centrelink benefits now continuing to receive a nice little earner from the federal government.
Making sure you get it right
There is a raft of fine details written into this scheme which make it strongly advisable to get help from a professional financial adviser when you tap into the downsizing concessions. Otherwise you might find yourself facing a hefty tax bill.
Basic things you need to know
• You have to be over 65. • You need to have owned the property for 10 years or more. • The contribution must be made within 90 days of settlement – ensure your trustee has time to process and correctly classify the contribution. • It can only be from the sale of one property. • You can’t use for the scheme for mobile homes or houseboats. • For couples, only one member needs to satisfy the ownership requirements to allow both to make a downsizer contribution. If they both make a downsizer contribution, it can total $600,000.
“For that reason, a lot of people cling to their pensions, and at the same time they’re usually clinging to the family home,” says Brendan Whitehouse, director of retirement income planning specialist BRW Financial Group. “They can’t get their thoughts around the idea of losing it.
If the correct form is not completed and provided before the contribution is made, the contribution is treated as a non-concessional contribution. In other words, you get taxed. So it’s crucial to get the paperwork right. Tax implications may also arise if you have run a business from the property, or received rental income from it.
“But for many others – I would say the majority of typical retirees – the Downsizer Superannuation Contribution offers some strong benefits,” Brendan says. “There’s a particular attraction for asset-rich, incomepoor retirees. They don’t have much super, they’ve got this big house worth one and a half million, and they’re living off an aged pension.
If you exceed your non-concessional contribution cap, you can choose to have the excess contributions and associated earnings (as calculated by the Australian Taxation Office) refunded with penalty tax only applied to the earnings. If not withdrawn, the excess contributions are taxed at the highest marginal tax rate. The tax payable must be withdrawn from superannuation.
“This package allows you to sell the family home and put $300,000 of it into super which has no tax on it. You can draw lump sums and do whatever you want to do. As your money dwindles, your pension will come back in.”
BRW Financial Group 1300 650574 www.brwfg.com.au
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
