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Canberra Today 21°/24° | Tuesday, December 7, 2021 | Digital Edition | Crossword & Sudoku

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Misguided Maryam needs her super sorted

Sorting out superannuation options is not for the faint hearted as GAIL FREEMAN’S client discovered. This is a sponsored post. 

MARYAM said she was looking at her retirement and had discovered she could draw her superannuation out of the fund now so she could use it for future plans. But she wasn’t quite right.

Gail Freeman.

“If I am not mistaken, you’re 58 and that age is your preservation age – the age that you can take your money out of super provided that you satisfy a condition of release,” I told her during our Zoom appointment.

“Under age 60 that condition of release is that you must have permanently retired from the workforce, but you are still working in your business. So you don’t satisfy that condition.”

Maryam replied: “Oh dear, that plan’s now gone out the window. Is there something else I can do?”

I said we should look at her super statement and see what that told us. “The first thing I notice is that you’re paying for death cover, total and permanent disability and income protection insurances. Do you actually need that cover? We should have a good look at that at a later date,” I said.

“The next thing I notice, Maryam, is that you have a binding nomination for your two daughters so they each get half of your balance in the fund.

“If you leave your super to a dependant, which includes a spouse and young children, they receive it tax free. As I understand it, your children are both around 30 so they don’t satisfy the definition of dependent.

“As your balance is about $400,000 that means that your daughters will have to pay tax of around $68,000 at 17 per cent. That seems a little unnecessary. If instead you leave the money to a surviving spouse then they receive it tax free and they can then gift it to the girls free of tax. Did you get advice about the binding nomination?”

Maryam said she hadn’t and believed she could just leave it to her daughters tax free.

“I recommend that you change your beneficiary to your spouse, which will reduce any tax if your spouse predeceases you,” I said.

“It may also be possible to do what is called a recontribution strategy. The components of your super are mainly taxable, with about $5000 tax free. The tax-free component does not attract any tax so, until you are 67, you may be able to convert the taxable taxed component into a tax-free component.

“You can withdraw and then recontribute $110,000 a year up to a maximum of $330,000 under age 67. If you can’t do this by the rules of the fund and you are still working after 67 you can still withdraw and recontribute $110,000 a year. This type of contribution is a non-concessional contribution.

“You can also contribute $27,500 as a concessional contribution, which you can salary sacrifice or pay it directly yourself and get a tax deduction if you pay it yourself and a tax reduction of the same amount if you salary sacrifice.”

Maryam said she had no idea there were so many potential problems with her super.

If you need help with your superannuation or taxation call the friendly team at Gail Freeman & Co Pty Ltd on 6295 2844, email or visit


This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser.

Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.

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