A tax offset of $540 is available for taxpayers making a non concessional contribution to a complying superannuation fund for the taxpayer?s low income or non working a spouse.

The maximum rebate is available where the taxable income of the low income spouse does not exceed $10800.

The maximum rebatable contribution is $3000.

Certain low income earners may qualify for a government co-contributions if they make eligible personal contributions i.e. non concessional after tax contributions.

• Have income of less than $61920
• Be aged under 71 on 30 June 2011
• If over 65, meet the work rule test
• Lodge an income tax return for the year

The maximum co contribution is $1000 where the person?s income is less than $31920.

Monies can be taken from a Superannuation fund at different points in time relative to a member's age. It is important that you are aware of your rights to take money from your superannuation fund.

Between 55 - 60 (current preservation age)  Transition to Retirement - Member can take a pension & it is reportable or at least the taxable component is with a tax offset equivalent to 15%. Member could also potentially take a tax free lump sum (up to $150,000) if they've retired. Maximum pension cannot exceed 10% of fund value.

Over 60 - If taking pension, non assessable non reportable, no limit to what can be taken if the member has retired. If the member is still working then the limit is 10% of the value of the members fund balance. After 65, there is no limit to what can be taken even if the member is working.

Minimum pension for 2010/11 to be taken prior to 30 June in order to maintain a tax free fund status -

Under 65 years 2%

65 - 74 years 2.5%

80 - 84 years 3.5%

90 - 94 years 5.5%

If you are 60 years or over when you receive a superannuation benefit, the benefit is not assessable income and is not exempt income.  This confirms it is the date the payment is received that determines whether a payment is subject to tax.  So the question becomes, was the payment received before or after the person turned 60.  There is no apportionment.

Under the SIS Act, you can start a pension on 1 July 2009; however a payment does not have to be made until 30 June 2010.  So in the year a person turns 60, it is a common strategy to start the pension on 1 July, but to not make the cash payment until the person turns 60.  This means the fund has paid a pension for the full year.  Also, as the member received the cash when he was 60, he pays no tax on it.  This is a very nice tax outcome.

The only time you have to be careful is where payments were made both before and after the person turned 60.  In that case all of the payments before aged 60 are subject to tax (with a 15% rebate).  All of the payments after the person turns 60 are not subject to tax.

Superannuation can get complicated and either putting too much money into superannuation or drawing too much or too little out can result in more tax than necessary and/or the fund losing its tax free status. Tax free status is only available for funds paying pensions.

Please take due care & revert to us for advice where you are unsure.

Superannuation Contributions

Monies can be contributed from after tax dollars as non concessional contributions or from pre tax dollars as a member concessional contribution (must be essentially self employed) or as an employer concessional contribution.

Employer contributions are typically 9% of gross salary but it is possible to have your employer contribute more by taking less of a salary. (Salary sacrifice)

Concessional contributions (Member aged under 50) - $25,000

Concessional contributions (Member aged 50 & over at 30 June 2011) - $50,000

Non Concessional Contributions - $150,000 with a bring forward rule of 3 years in 1 or $450,000. The $450,000 bring forward rule is applicable only to those 65 & under as at 30 June 2011.

There are restrictions on funds accepting contributions ? Related to age & gainful employment starting at 65.