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slide1. Presented by
Firstname Surname
Jobtitle/Position A presentation to
Client Name
Date Smart EOFY Strategies
For 30 June 2015<br>
slide2. Important information
This information is published by MLC Limited (ABN 90 000 000 402), 105–153 Miller Street North Sydney, NSW, 2060, a member of the National Australia Group of companies. It is intended to provide general information only and does not take into account any particular person’s objectives, financial situation or needs. Because of this, you should, before acting on any information in this document, speak to a financial adviser and/or taxation professional so they can help you assess which year-end strategies suit you best.
MLC is not a registered tax agent. If you wish to rely on this information to determine your personal tax obligations you should consult with a Registered Tax Agent.
The tax estimates provided in this presentation are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. Disclaimer Smart EOFY Strategies for 30 June 2015 2<br>
slide3. Agenda Why invest via super?
Super strategies
Insurance
Other tax-effective year-end opportunities
How I can help 3 Smart EOFY Strategies for 30 June 2015<br>
slide4. Why invest via super?
Tax concessions every step of the way 1. When you contribute to super
Make contributions from pre-tax salary
Claim contributions as a tax deduction
Get a Government co-contribution of up to $500
Get a tax offset of up to $540 Retirement Now Smart EOFY Strategies for 30 June 2015 4<br>
slide5. 5 Why invest via super?
Tax concessions every step of the way 2. While build up super
Earnings in fund taxed at maximum of 15%
Earnings from investments in own name taxed at up to 491% 1 Includes a Medicare levy of 2% and the temporary Budget Repair levy of 2%. Retirement Now Smart EOFY Strategies for 30 June 2015<br>
slide6. 6 Why invest via super?
Tax concessions every step of the way 3. When using super to pay pension
No tax on investment earnings
Tax offset between preservation age1 and 59
Tax-free income at 60+ Retirement Now 1Your preservation age ranges from age 55 to age 60 depending on your date of birth. Smart EOFY Strategies for 30 June 2015<br>
slide7. Super EOFY strategies
For middle to higher income earners under preservation age Get more from your salary or bonus You can only sacrifice prospective salary or a bonus into super (i.e. income to which you are not already entitled) and need to make an effective salary sacrifice agreement with your employer. Smart EOFY Strategies for 30 June 2015 7<br>
slide8. Salary sacrifice case study William is aged 45
About to receive a $5,000 pa salary increase
Will bring his total salary to $100,000 pa
Considering salary sacrificing this additional $5,000 into super Smart EOFY Strategies for 30 June 2015 8<br>
slide9. Salary sacrifice case study 1 Includes a Medicare levy of 2%. Smart EOFY Strategies for 30 June 2015 9<br>
slide10. 10 Results (after 20 years) Assumptions:. A 20 year comparison based on $5,000 pa of pre-tax salary. Both the super and non-super investments earn a total pre-tax return of 7.7% pa (split 3.3% income and 4.4% growth). Investment income is franked at 30%. All values are after income tax (at 15% in super and 38.5% outside super) and CGT (including discounting). Medicare Levy is 1.5% (this projection does not allow for the increase to 2% that occurs on 1 July 2014).
Note: No lump sum tax is payable on the super investment as William will be 65 at the end of the investment period. Receive pay rise as after-tax salary and invest outside super Salary sacrifice pay rise into super $0 $189,371 $119,485 $80,000 $120,000 $160,000 $200,000 $40,000 + $69,886 Smart EOFY Strategies for 30 June 2015<br>
slide11. Super EOFY strategies Make tax deductible super contributions To be able to claim a portion of your personal super contributions as a tax deduction, you need to complete a valid ‘notice of intent’ form and give it to your super fund within specific timeframes.
You also need to get an acknowledgement back from your super fund that the notice has been received and accepted by them.
If you don’t you may not be able to claim a deduction. (You also need to be eligible to make a contribution). Smart EOFY Strategies for 30 June 2015 11<br>
slide12. Consider contribution caps Salary sacrifice and personal deductible contributions count, along with other amounts, to ‘concessional’ contribution (CC) cap
The concessional cap is $30,000 in 2014/15*
The caps are annual amount and you can’t carry forward any unused amount to another financial year
It’s really important you make the most of the cap each year, particularly if you are approaching retirement
People who earn in excess of $300K pay an additional 15% tax on concessional contributions made over the $300K threshold and within the cap
* For people aged 48 or under on 30/6/14 the cap is $30,000 and $35,000 for people aged 49 or over on 30/6/14. Smart EOFY Strategies for 30 June 2015 12<br>
slide13. Cap implications Excess concessional contributions for the 2014/15 financial year and beyond can be returned to the member and taxed at their maximum tax rate (MTR). An “Excess Concessional Contributions Charge” will also be applied by the ATO.
Review this year’s contributions and remember that a range of other items count towards this cap, including:
super guarantee contributions, including those from more than one employer
concessional contributions made to fund insurance in super, and
contributions you claim as a tax deduction
Review your contributions in the months leading up to 30 June, particularly if you had or likely to receive a pay increase or bonus which requires additional superannuation contributions to be made. Smart EOFY Strategies for 30 June 2015 13<br>
slide14. Super EOFY strategies Get a super top up from the Government Smart EOFY Strategies for 30 June 2015 14<br>
slide15. Co-contribution case study Ryan is aged 40
Employed on salary of $37,000 pa
Wants to invest $1,000 in after tax salary each year until he retires at 60 Smart EOFY Strategies for 30 June 2015 15<br>
slide16. Co-contribution case study Smart EOFY Strategies for 30 June 2015 16 1 Includes a Medicare levy of 2%.<br>
slide17. Results (after 20 years) Assumptions:. A 20 year comparison based on an after-tax investment of $1,000 pa. Both the super and non-super investments earn a total pre-tax return of 7.7% pa (split 3.3% income and 4.4% growth). Investment income is franked at 30%. All values are after income tax (at 15% in super and 34% outside super) and CGT (including discounting). Medicare Levy is 1.5% (this projection does not allow for the increase to 2% that occurs on 1 July 2014).
Note: No lump sum tax is payable on the super investment as Ryan will be 60 at the end of the investment period. $1,000 pa invested outside super (no co-contribution) $1,000 pa invested inside super (includes co-contribution) $0 $60,893 $39,965 $40,000 $60,000 $80,000 $100,000 $20,000 + $20,928 Smart EOFY Strategies for 30 June 2015 17<br>
slide18. Super EOFY strategies Boost partner’s super and reduce your tax
For people who have a spouse who earns less than $13,800 pa
Make after-tax super contribution on their behalf
Receive tax offset of up to $540
Grow spouse’s super and reduce your tax Smart EOFY Strategies for 30 June 2015 18<br>
slide19. Other super EOFY strategies
Make insurance more affordable Concessions can:
Make it cheaper to insure through super, or
Enable you to purchase a higher level of cover Buy insurance in super with pre-tax dollars Employee Claim super contributions as tax deduction Self-employed Use co-contribution to help pay for future insurance Eligible for co-contribution Buy life and total and permanent disability insurance in super Smart EOFY Strategies for 30 June 2015 19<br>
slide20. Other smart EOFY opportunities
Pre-pay expenses Pre-pay annual premiums for an income protection policy held in your own name
Pre-pay up to 12 months interest on an investment loan (usually only available with fixed rate facilities) Smart EOFY Strategies for 30 June 2015 20 If you want to manage your cashflow more efficiently, you could:<br>
slide21. Other super EOFY strategies 1 Includes a Medicare levy of 2% and the temporary Budget Repair levy of 2% You may want to:
Cash out non-super investment
Make personal super contribution
As a result, you could:
Have earnings in super fund taxed at max. rate of 15% (or 30% for people whose earnings and contributions are more than $300k+ p.a.
Have earnings from investment in own name taxed at up to 49%1
Reduce tax on investment earnings by up to 34% Smart EOFY Strategies for 30 June 2015 21 Make after tax contributions to super<br>
slide22. Other smart EOFY strategies
Manage CGT If you make a capital gain on asset sales this financial year, consider: making a super contribution and claiming amount as tax deduction (if eligible) Smart EOFY Strategies for 30 June 2015 22<br>
slide23. Other smart EOFY strategies
Manage CGT If you make a capital gain on asset sales this financial year, consider: making a super contribution and claiming amount as tax deduction (if eligible) Smart EOFY Strategies for 30 June 2015 23 If you have received a capital loss from your investments, consider: utilising the capital loss against any capital gains, so you can manage your tax on your investments more efficiently<br>
slide24. Strategy wrap-up
Before June 30 Super strategies
Salary sacrifice contributions
Personal deductible contributions Co-contributions
Spouse contributions Insurance strategies
Buy insurance in super
Pre-pay expenses Other smart opportunities
Make after-tax contributions
Manage CGT Start planning for EOFY 2014/15 now Key issues to consider
Review concessional contributions
Review TTR strategy
Make the most of your tax refund After June 30 Smart EOFY Strategies for 30 June 2015 24<br>
slide25. How I can help Note to adviser: Optional slide(s)- e.g. relevant content regarding your advice services and how people can make an appointment. Smart EOFY Strategies for 30 June 2015 25<br>
slide26. Contact details line 1
Contact details line 2 Thank you MLC Limited ABN 90 000 000 402 AFSL 230694. Part of the National Australia Bank Group of Companies.<br>
Firstname Surname
Jobtitle/Position A presentation to
Client Name
Date Smart EOFY Strategies
For 30 June 2015<br>
slide2. Important information
This information is published by MLC Limited (ABN 90 000 000 402), 105–153 Miller Street North Sydney, NSW, 2060, a member of the National Australia Group of companies. It is intended to provide general information only and does not take into account any particular person’s objectives, financial situation or needs. Because of this, you should, before acting on any information in this document, speak to a financial adviser and/or taxation professional so they can help you assess which year-end strategies suit you best.
MLC is not a registered tax agent. If you wish to rely on this information to determine your personal tax obligations you should consult with a Registered Tax Agent.
The tax estimates provided in this presentation are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. Disclaimer Smart EOFY Strategies for 30 June 2015 2<br>
slide3. Agenda Why invest via super?
Super strategies
Insurance
Other tax-effective year-end opportunities
How I can help 3 Smart EOFY Strategies for 30 June 2015<br>
slide4. Why invest via super?
Tax concessions every step of the way 1. When you contribute to super
Make contributions from pre-tax salary
Claim contributions as a tax deduction
Get a Government co-contribution of up to $500
Get a tax offset of up to $540 Retirement Now Smart EOFY Strategies for 30 June 2015 4<br>
slide5. 5 Why invest via super?
Tax concessions every step of the way 2. While build up super
Earnings in fund taxed at maximum of 15%
Earnings from investments in own name taxed at up to 491% 1 Includes a Medicare levy of 2% and the temporary Budget Repair levy of 2%. Retirement Now Smart EOFY Strategies for 30 June 2015<br>
slide6. 6 Why invest via super?
Tax concessions every step of the way 3. When using super to pay pension
No tax on investment earnings
Tax offset between preservation age1 and 59
Tax-free income at 60+ Retirement Now 1Your preservation age ranges from age 55 to age 60 depending on your date of birth. Smart EOFY Strategies for 30 June 2015<br>
slide7. Super EOFY strategies
For middle to higher income earners under preservation age Get more from your salary or bonus You can only sacrifice prospective salary or a bonus into super (i.e. income to which you are not already entitled) and need to make an effective salary sacrifice agreement with your employer. Smart EOFY Strategies for 30 June 2015 7<br>
slide8. Salary sacrifice case study William is aged 45
About to receive a $5,000 pa salary increase
Will bring his total salary to $100,000 pa
Considering salary sacrificing this additional $5,000 into super Smart EOFY Strategies for 30 June 2015 8<br>
slide9. Salary sacrifice case study 1 Includes a Medicare levy of 2%. Smart EOFY Strategies for 30 June 2015 9<br>
slide10. 10 Results (after 20 years) Assumptions:. A 20 year comparison based on $5,000 pa of pre-tax salary. Both the super and non-super investments earn a total pre-tax return of 7.7% pa (split 3.3% income and 4.4% growth). Investment income is franked at 30%. All values are after income tax (at 15% in super and 38.5% outside super) and CGT (including discounting). Medicare Levy is 1.5% (this projection does not allow for the increase to 2% that occurs on 1 July 2014).
Note: No lump sum tax is payable on the super investment as William will be 65 at the end of the investment period. Receive pay rise as after-tax salary and invest outside super Salary sacrifice pay rise into super $0 $189,371 $119,485 $80,000 $120,000 $160,000 $200,000 $40,000 + $69,886 Smart EOFY Strategies for 30 June 2015<br>
slide11. Super EOFY strategies Make tax deductible super contributions To be able to claim a portion of your personal super contributions as a tax deduction, you need to complete a valid ‘notice of intent’ form and give it to your super fund within specific timeframes.
You also need to get an acknowledgement back from your super fund that the notice has been received and accepted by them.
If you don’t you may not be able to claim a deduction. (You also need to be eligible to make a contribution). Smart EOFY Strategies for 30 June 2015 11<br>
slide12. Consider contribution caps Salary sacrifice and personal deductible contributions count, along with other amounts, to ‘concessional’ contribution (CC) cap
The concessional cap is $30,000 in 2014/15*
The caps are annual amount and you can’t carry forward any unused amount to another financial year
It’s really important you make the most of the cap each year, particularly if you are approaching retirement
People who earn in excess of $300K pay an additional 15% tax on concessional contributions made over the $300K threshold and within the cap
* For people aged 48 or under on 30/6/14 the cap is $30,000 and $35,000 for people aged 49 or over on 30/6/14. Smart EOFY Strategies for 30 June 2015 12<br>
slide13. Cap implications Excess concessional contributions for the 2014/15 financial year and beyond can be returned to the member and taxed at their maximum tax rate (MTR). An “Excess Concessional Contributions Charge” will also be applied by the ATO.
Review this year’s contributions and remember that a range of other items count towards this cap, including:
super guarantee contributions, including those from more than one employer
concessional contributions made to fund insurance in super, and
contributions you claim as a tax deduction
Review your contributions in the months leading up to 30 June, particularly if you had or likely to receive a pay increase or bonus which requires additional superannuation contributions to be made. Smart EOFY Strategies for 30 June 2015 13<br>
slide14. Super EOFY strategies Get a super top up from the Government Smart EOFY Strategies for 30 June 2015 14<br>
slide15. Co-contribution case study Ryan is aged 40
Employed on salary of $37,000 pa
Wants to invest $1,000 in after tax salary each year until he retires at 60 Smart EOFY Strategies for 30 June 2015 15<br>
slide16. Co-contribution case study Smart EOFY Strategies for 30 June 2015 16 1 Includes a Medicare levy of 2%.<br>
slide17. Results (after 20 years) Assumptions:. A 20 year comparison based on an after-tax investment of $1,000 pa. Both the super and non-super investments earn a total pre-tax return of 7.7% pa (split 3.3% income and 4.4% growth). Investment income is franked at 30%. All values are after income tax (at 15% in super and 34% outside super) and CGT (including discounting). Medicare Levy is 1.5% (this projection does not allow for the increase to 2% that occurs on 1 July 2014).
Note: No lump sum tax is payable on the super investment as Ryan will be 60 at the end of the investment period. $1,000 pa invested outside super (no co-contribution) $1,000 pa invested inside super (includes co-contribution) $0 $60,893 $39,965 $40,000 $60,000 $80,000 $100,000 $20,000 + $20,928 Smart EOFY Strategies for 30 June 2015 17<br>
slide18. Super EOFY strategies Boost partner’s super and reduce your tax
For people who have a spouse who earns less than $13,800 pa
Make after-tax super contribution on their behalf
Receive tax offset of up to $540
Grow spouse’s super and reduce your tax Smart EOFY Strategies for 30 June 2015 18<br>
slide19. Other super EOFY strategies
Make insurance more affordable Concessions can:
Make it cheaper to insure through super, or
Enable you to purchase a higher level of cover Buy insurance in super with pre-tax dollars Employee Claim super contributions as tax deduction Self-employed Use co-contribution to help pay for future insurance Eligible for co-contribution Buy life and total and permanent disability insurance in super Smart EOFY Strategies for 30 June 2015 19<br>
slide20. Other smart EOFY opportunities
Pre-pay expenses Pre-pay annual premiums for an income protection policy held in your own name
Pre-pay up to 12 months interest on an investment loan (usually only available with fixed rate facilities) Smart EOFY Strategies for 30 June 2015 20 If you want to manage your cashflow more efficiently, you could:<br>
slide21. Other super EOFY strategies 1 Includes a Medicare levy of 2% and the temporary Budget Repair levy of 2% You may want to:
Cash out non-super investment
Make personal super contribution
As a result, you could:
Have earnings in super fund taxed at max. rate of 15% (or 30% for people whose earnings and contributions are more than $300k+ p.a.
Have earnings from investment in own name taxed at up to 49%1
Reduce tax on investment earnings by up to 34% Smart EOFY Strategies for 30 June 2015 21 Make after tax contributions to super<br>
slide22. Other smart EOFY strategies
Manage CGT If you make a capital gain on asset sales this financial year, consider: making a super contribution and claiming amount as tax deduction (if eligible) Smart EOFY Strategies for 30 June 2015 22<br>
slide23. Other smart EOFY strategies
Manage CGT If you make a capital gain on asset sales this financial year, consider: making a super contribution and claiming amount as tax deduction (if eligible) Smart EOFY Strategies for 30 June 2015 23 If you have received a capital loss from your investments, consider: utilising the capital loss against any capital gains, so you can manage your tax on your investments more efficiently<br>
slide24. Strategy wrap-up
Before June 30 Super strategies
Salary sacrifice contributions
Personal deductible contributions Co-contributions
Spouse contributions Insurance strategies
Buy insurance in super
Pre-pay expenses Other smart opportunities
Make after-tax contributions
Manage CGT Start planning for EOFY 2014/15 now Key issues to consider
Review concessional contributions
Review TTR strategy
Make the most of your tax refund After June 30 Smart EOFY Strategies for 30 June 2015 24<br>
slide25. How I can help Note to adviser: Optional slide(s)- e.g. relevant content regarding your advice services and how people can make an appointment. Smart EOFY Strategies for 30 June 2015 25<br>
slide26. Contact details line 1
Contact details line 2 Thank you MLC Limited ABN 90 000 000 402 AFSL 230694. Part of the National Australia Bank Group of Companies.<br>