While the new super reforms may see some individuals paying a little more tax, financial services firm RSM says analysis demonstrates superannuation remains “the best tax structure”.
RSM financial adviser Nick Andrews said although individuals will be forced to hold any excess amount above $1.6 million in accumulation and incur up to 15 per cent tax earnings, keeping the money in super is still going to be the best strategy for most SMSF trustees.
A person with $2,000,000 in super and $540,000 outside of super will have two options said Mr Andrews; contribute the $540,000 into superannuation using bring-forward rules; or to maintain that amount outside of their superannuation.
“If the person contributes the $540,000 into superannuation before 30 June, they can limit their tax to 15 per cent, which is projected to grow their initial $540,000 investment to $1,805,132 after 20 years, assuming investment growing of 4 per cent income and 3 per cent capital gain,” said Mr Andrews.
If they had elected not to contribute the capital into superannuation and are taxed at 34.5 per cent, he said, the reduction in after tax returns would result in their investment capital only growing to $1,513,126.
“If they are taxed at the top marginal rate of 49 per cent, the impact would be even more severe and their portfolio would have only grown to $1,311,941,” he said.
“The after-tax outcome differs a staggering $493,191 if the person were to miss their opportunity to contribute and were exposed to 49 per cent marginal tax rate over the 20-year period. This means some Australians face a rapidly-closing window to make one of the best financial decisions in their lifetime.”
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