Question

I would like to clarify tax treatment for a person over 60, who has total super of say $750K. I believe any payments made from an SMSF are free of tax. I think though that any earnings inside the fund are still subject to the 15% earnings tax. And tax on contributions from an employer is still 15%. Is this right?

Answer, Paul Rickard

Thanks for the question.

1. a) Yes, provided the recipient is over 60 and the payment is not from an unfunded source (defined benefit scheme), payments are free of tax;
2. b) Investment earnings inside the fund (SMSF) are subject to a 15% tax, unless the investments wholly support the payment of a super pension, in which case they are taxed at 0%; and
3. c) Concessional contributions, which include the employer’s 9.5%, salary sacrifice contributions and any contributions you claim a tax deduction for, are taxed at 15% at source. If you earn more than $250,000, an additional tax of 15% applies (known as Division 293 tax).

Question

James Dunn was talking with you about using ETFs to access fixed interest, would you be able to recommend five best performing “Fixed Interest ETFs” for us?

Answer, Paul Rickard

James covered a number of ETFs in this article. What sort of risk (duration risk through term or credit risk through the issuer) do you want to take? Government bonds or corporate bonds? Cash? Long term or short term fixed interest? Performance depends almost entirely on these attributes.

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