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Questions & Answers : The answers below are for general information purposes only. It is not intended to be, nor should it be read as specific personal financial advice. You should contact your financial adviser or AMM should you have any further questions. Your advisers will address to your problems in accordance with your specific circumstances.
Q : What are the tax incentives for retirement income streams ? A: Most of the pension like allocated pension and term allocated pension (TAP), if they are under a complying superannuation fund, are tax free for income and capital gains. Pension income streams are taxed at the receipients' marginal tax rates on the taxable portion of the pension but recipients are entitled to a 15% tax rebate. Besides, the principal amount of the income streams may have 50% concession under the centrelink asset test e.g. Term Allocated Pension (TAP). However, this concession is only be applicable up to 20th September 2007. Q: What does Lender Mortgage Insurance (LMI) mean and when it is required ? A: Purpose of the Lender Mortgage Insurance is to protect the lenders if borrowers default in repayment. Normally, it only applies to mortgages with Loan Valuation Ratio (LVR) over 80%. When it is below 80%, lenders normally would absorb the cost of the insurance premium whereas the borrowers have to pay for the premium when LVR exceeds 80%. Q: How does a self-employed person contribute to the superannuation fund ? A: If you are classified as a self-employed person under the ATO definition, your personal contribution to a complying superannuation fund is 100% tax deductible up to the first $5,000. Beyond this limit, tax deductibility reduces to 75% until the total contributions reach the relevant aged-base limit. Starting from July 2007, tax deductibility of personal superannuation contribution by self-employed person will be 100% up to $50,000 applies to all ages.
Q: What is concessional superannuation contribution and what is the limit ? A: "Concessional contribution" is a new term to replace "deductible contribution" under the new superannuation regime. It simply means that a person contributing to the superannuation is claiming tax deduction on the contribution. Instead of paying personal marginal tax, the amount contributed would be taxed at 15% contribution tax. The maximum amount of concessional contribution is $50,000 for all ages. However, if a person turns 50 years of age before 2012/2013, he can use a higher transitional concessional contribution limit which is $100,000 from the financial year he turns age 50, but only until 2011/2012. From 2012/2013, the maximum reverts to the standard concessional contribution limit - $50,000.
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Australian Financial Services Licence No. 234951 Ivan Lee BEc, M App Fin, CPA (Specialist in Financial Planning) Authorised Representative (AR No. 298341) C/- Australian Money Masters PO Box 190, Eastwood NSW 2122, PH/FX : 02 94166335 Mobil: 0412685283 Email : ilee@money-masters.com.au
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