Can I take money out of my superannuation fund?
Superannuation is designed to provide Australians with money in their retirement. The government has strict rules around when people can take that money out of their fund because it wants to prevent people eroding their savings before they reach retirement.
As a general rule, you can only take money out of your superannuation fund when you reach:
- Age 65
- Your ‘preservation age’ and retire
- Your preservation age and begin a ‘transition to retirement’ while still working
That said, you can take money out of your superannuation fund early based on one of these seven special conditions:
- Compassionate grounds
- Severe financial hardship
- Temporary incapacity
- Permanent incapacity
- Superannuation inheritance
- Superannuation balance under $200
- Temporary resident departing Australia
SMSFs can invest in conventional assets such as shares, term deposits, managed funds and property.
SMSFs can also buy ‘collectibles’ such as artwork, jewellery, antiques, coins, stamps, vintage cars and wine – although there are special rules that apply to collectibles.
Investments must be made on an arm’s length basis, which means that assets must be bought and sold at market prices, while income must reflect the market rate of return.
As a general rule, SMSFs can’t buy assets from members or related parties.
Four questions to ask yourself before taking out an SMSF include:
- Do I have enough superannuation to justify the higher set-up and running costs?
- Am I able to handle complicated compliance obligations?
- Am I willing to spend lots of time researching investment options?
- Do I have the skill to make big financial decisions?
It’s also worth remembering that ordinary superannuation funds usually offer discounted life insurance and disability insurance. These discounts would no longer be available if you decided to manage your own super.
Yes, you can transfer money from overseas into your superannuation account – under certain conditions. First, you must provide your tax file number to your fund. Second, if you are aged between 65 and 74, you must have worked at least 40 hours within 30 consecutive days in a financial year. (Australians under 65 aren’t subject to a work test; Australians aged 75 and over cannot receive contributions to their superannuation account.)
Money transferred from overseas will generally count to both your concessional contributions limit and your non-concessional contributions limit. You will have to pay income tax on the applicable fund earnings component of any money transferred from overseas. You might also be liable for excess contributions tax.
Superannuation is calculated at the rate of 9.5 per cent of your gross salary and wages. So if you had a salary of $50,000, your superannuation would be 9.5 per cent of that, or $4,750. This would be paid on top of your salary.
The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.
Superannuation is taxed. It is generally taxed at 15 per cent. However, if you earn less than $37,000, you will be automatically reimbursed up to $500 of the tax you paid. Also, if your income plus concessional superannuation contributions exceed $250,000, you will also be charged Division 293 tax. This is an extra 15 per cent tax on your concessional contributions or the amount above $250,000 – whichever is lesser.
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