trustdeed.com.au e-Newsletter
Australia is truly a tax heaven - But wait there is more ...
 
July / 2007
 
 
 

www.trustdeed.com.au provides online service for creating, storing & managing legal documents for Companies and Trust deeds for SMSF, Family, Unit & Hybrid Trusts, click here for more information.

New / Update SMSF Trust Deeds cost only $110 and can be created in 20 minutes, Trust Deeds are emailed instantly! 
 
 
 
 
Super Co-contributions for retirees 
 

Retirees had one dream, contribute all assets in super, convert the fund to pension phase and then draw tax free income stream (as long as minimum was withdrawn) after 1st July 07.  Nirvana for over 60 year's olds, this dream is now a reality a total "tax free" life.

 

Australia is truly a "Tax Heaven" for some.

 

The benefit of putting all monies in super does not only give the retiree "Tax Free" Income for life, it also allows asset rich kids to use parents as a tax shelter for their investment incomes, as they can now use parents for their tax free thresholds of $6000. Further, for 2007/8 year any income up to $11,000 due to low income rebate of $750 is tax free and any income for over 65 year old up to $25,867 is tax free due to senior tax offset.

All this is possible as income stream from a super pension is not included in the retiree's total income. In fact, no Payment summary is required to be issued by the super fund.

But wait. There is more, how about, "getting something from the tax man". Pay back time.

This is how the strategy works   :  Effective from 1 July 2007: the co-contribution initiative has been extended to include self-employed persons. Hence, any small salary or business income can make retiree's eligible for co-contribution.

It means that if your total income for co-contribution purposes is $28,980 or less in a year of income, the Government will put in one dollar and fifty cents ($1.50) for every dollar ($1) you put into your super fund after tax (you do not claim a deduction for this contribution) and If your total income (your assessable income + your reportable fringe benefits) is less than $58,980 in a year of income and you make personal superannuation contributions of up to a $1,000, the Government will make a super co-contribution.

From 1st July 2007, you can only receive the government co-contribution if 10% or more of your total income is from active income. Active income is income from running a business, eligible employment or a combination of both.

When you work out what per cent of your income is active, ignore your business income deductions. This helps self-employed people with low incomes or low profit margins.

The following table shows if your income is included in total income and if it counts as active income.

Income source

Total income

Active income

Partnership income from carrying on a business

Yes

Yes

Investment income

Yes

No

Director fees as a company director

Yes

Yes

Employment income through a company or trust

Yes

Yes

Distribution from a trust that is carrying on a business

Yes

No

Eligible employment generally means anything resulting in you being treated as an employee.  Investment income received directly or via a trust is not considered as active income.

Hence any turnover of trading business income or any paid work in a year will be considered as active work and make the retiree eligible for co-contribution as long as this active work is more then 10% of total income. 

Some examples for 60 year old retiree to become eligible for co-contribution are:

1)       $200 trading income (form buying and selling of any item), if this is the only income, besides pension income - trading income then becomes more then 10% of total income of the retiree. This trading income can be from one transaction.

2)       $200 salary income - PAYG payment summary - for say, mowing lawns, if this is the only income of the retiree besides pension income - salary income then becomes more then 10% of total income of the retiree. This salary income can be for one hour of work.

3)       If dividend and / or interest income + Rental Income = $5000 at least $556 income has to be earned from active income  (Total income $5,556 = more then 10% from active income)

To be entitled to co-contribution you must be less than 71 years old at the end of the income year in which you make the personal superannuation contribution. It means that there is a window of opportunity for retirees from age 60 to 70.

A couple can get up to $3,000 and if co- contributions for 2006 are repeated a couple can receive up to $6,000. As there is no maximum which has to be withdrawn from the new account based pension, all the retiree has to do is withdraw an extra $1000 and contribute it back as non-concessional contribution in the fund.

There is a work test (40 hours in a consecutive 30 day period) condition for contributions from over 65 year olds. And to receive non - concessional contributions from memebers (not age based contributions) and Government co - contributions for members, your trust deed must allow trustees to accept these contributions. 

 
 
  New / Update SMSF Trust Deeds cost only $110 and can be 
  created in 20 minutes 24/7, Trust Deeds are emailed instantly!
 
 
 
Split Super with older spouse

In many cases there is an age difference between spouses; sometimes this age difference means that one spouse will be 60 years some 10 years before the other spouse. Under these circumstances, spouse splitting every year ensures that younger spouse splits 85% of concessional contributions (deductible) with older spouse.

Any non-concessional contributions (UN deducted) made to a superannuation fund between 1st January 2006 to 5th April 2007 can be split to the older spouse. Any contribution to 30th June 2006 can be split on 1st July 06 on requests on a form by the younger spouse. This form (NAT 15237) can be downloaded from the ATO website.

Splitting even mandated compulsory 9% contributions from younger spouse to older spouse for a  number of years can create a substantial Tax Free Income Stream for a couple in retirement years.

Please note this opportunity can only be used if the trust deed allows the trustee to move contributions from one member to another member. If you are in this situation, you must update your trust deed. 

 
 

You have to register to purchase a trust deed from our website.

 

 

 
Our Trust Deed Include Spouse splitting and allow Trustees to accept co-contributions for members 
 
We are the only online Trust Deed Providers where you can purchase a Trust Deed 24/7 for $110.
 
WE ARE OPEN 24 HOURS FOR YOUR CLIENTS TO SET UP THEIR 1ST JULY 2007 SELF MANAGED SUPER FUND.
 
IT TAKES LESS THEN 20 MINUTES TO REGISTER AND BUILD A SMSF DEED FOR YOUR CLIENTS.
 
OUR DEED PACKAGE IS THE ONLY ONLINE SERVICE WHICH IS 1ST JULY 2007 COMPLIANT

There is also online chat help at www.trustdeed.com.au

Please ring if you need help.

The trust deed available at www.trustdeed.com.au includes the above provisions and cost only $110. You can keep the trust deed up to date for the next five years for only $165.

 

As time is of the essence, a trust deed on our website can be created / updated in 20 Minutes!

 

Companies can be formed on www.trustdeed.com.au for only $510 including ASIC fees of $400 (available soon).

 
This email is sent by:

Sales Team
www.trustdeed.com.au
Deed Dot Com Dot Au Pty Ltd

P 02 9638 2807 F 02 9838 3060
61, Gollan Avenue Oatlands NSW 2116
PO Box 1010 Dundas NSW 2117
In This Issue
Super Co - contributions for retirees
Split super with older spouse
Our Trust Deeds are up to date
How our Web Site works
 
Quick Links
 
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