At an elementary level, many families in business do not want to sell their assets to the next generation. Effectively the business will be “gifted” to the generation who has worked in the family business. This strategy requires that the exiting parents have enough wealth to retire well, benefit other family members and ensure that their spouses do not have financial concerns later on-on.
This is where superannuation is concerned. An adequately structured superannuation fund with sufficient assets will ordinarily be a cornerstone decision in whether the family business can be gifted or sold to the next generation.
Beyond the need for a family in business to be wealthy enough to transfer assets to the next generation – superannuation also offers a family in business unique opportunities. The ability for an SMSF to fall outside of the Superannuation Complaints Tribunal – can represent an opportunity for blended families with different interests.
Further, for families operating an SMSF, controlling a superannuation fund after death is essential. Binding death benefit nominations can assist some– and the control structured through trustees, successor shares, and the solvency of superannuation fund for lumpy assets are all important concepts that need holistic business, super and tax advice.
In Australia, you can generally access your superannuation fund money when you meet one of the following conditions of release:
Retirement: You can access your superannuation fund money when you reach preservation age and retire. Your preservation age is between 55 and 60, depending on your date of birth.
Attaining age 65: You can access your superannuation fund money when you reach age 65, regardless of whether you are still working or not.
Terminal illness: If you are suffering from a terminal illness and have less than two years to live, you can access your superannuation fund money.
Permanent incapacity: If you are permanently incapacitated and unable to work, you can access your superannuation fund money.
Severe financial hardship: If you are experiencing severe financial hardship, you may be able to access your superannuation fund money in limited circumstances.
Compassionate grounds: If you have exceptional circumstances, such as the payment of medical expenses or the modification of your home for disability reasons, you may be able to access your superannuation fund money on compassionate grounds.
It’s important to note that accessing your superannuation fund money before you meet a condition of release may result in significant tax consequences and reduced retirement savings. Additionally, some types of superannuation benefits, such as death and total and permanent disability benefits, may be paid out without meeting a condition of release.
It’s important to understand the conditions of release for your superannuation fund and to seek tax advice from a tax professional like Westcourt if you are considering accessing your superannuation fund money.
In Australia, you are generally not able to use your superannuation fund to directly purchase a house. However, there is a government-supported scheme called the First Home Super Saver Scheme (FHSSS) that allows you to use your superannuation savings to help purchase your first home.
Under the FHSSS, you can make voluntary contributions to your superannuation fund and apply to have those contributions and associated earnings released to help purchase your first home. To be eligible for the FHSSS, you must be at least 18 years of age and have never owned property in Australia before.
The released amount can be used for a deposit on a home, or for other costs associated with purchasing a home, such as legal fees or stamp duty. The released amount is taxed at your marginal tax rate, less a 30% tax offset.
It’s important to understand the rules and requirements of the FHSSS, and to seek advice from a tax professional like Westcourt if you are considering using your superannuation savings to help purchase your first home. Additionally, it’s important to consider the impact that making voluntary contributions to your superannuation fund may have on your retirement savings and to weigh this against the benefits of using your superannuation savings to purchase a home.
Starting a superannuation pension in your self-managed superannuation fund (SMSF) can be a complex process, and it’s important to seek professional advice from a financial advisor, tax professional, or SMSF specialist to ensure that you are meeting all of your legal and regulatory obligations.
Here are the general steps to start a superannuation pension in your SMSF:
It’s important to understand that starting a superannuation pension in your SMSF can have significant tax implications and that the rules and requirements for starting and maintaining a pension in an SMSF can be complex. It’s important to seek professional tax advice to ensure that you are meeting all of your legal and regulatory obligations and that you have a clear understanding of the impact that starting a pension may have on your retirement savings. At Westcourt we manage almost all of the above processes to simplify the matter.
It is illegal in Australia to intentionally avoid or reduce your obligation to pay the minimum level of superannuation guarantee (SG) contributions for your employees. The SG is a legislated minimum standard for employer contributions to their employees’ superannuation funds, and failure to make the required contributions can result in significant fines and penalties.
However, there are some steps you can take to manage your superannuation costs, including:
It’s important to understand that these options may have implications for your employees and to seek professional advice from a Hr advisor or tax professional like Westcourt to ensure that you are meeting all of your legal and regulatory obligations and that you have a clear understanding of the impact of any changes to your superannuation arrangements.