When you reach preservation age (currently 55 and over, depending on the year you were born), it is possible to start drawing on your superannuation with a transition to retirement pension (“TRIS”). This goes unnoticed by many who are working full-time and don’t intend to retire for some years. Quite rightly, their main priority is to put more into super for when the time to give up work finally comes around. However, unlocking your super with a TRIS has useful taxation benefits regardless of your retirement intentions and can actually boost your superannuation or help reduce personal debt.
The first attraction of starting a TRIS is that earnings inside your superannuation will generally become tax exempt. This is great if you have an SMSF as the ATO will send you a refund cheque for the franking credits on your Australian share portfolio. Saving tax in super with a TRIS is a leg up for your retirement!
The second benefit is that starting a TRIS also means taking a pension of at least 4% and up to a maximum of 10%, of the value of your fund. This extra cash flow can be used to tax effectively boost your superannuation via increased salary sacrifice or by paying down personal debt and reducing the burden of interest.
This strategy is not appropriate for everyone as a TRIS is likely to be subject tax on the income you receive. While there is a 15% tax offset on TRIS income, the tax will still vary depending on the composition of your fund and your marginal tax rate. The situation becomes less complicated for people age 60 over as they can receive pension income tax free.
In order to help unlock your super, we are offering clients a FREE Strategy review to help them make that all important first step. Contact us today on 02 9052 6966 and or click here to go to our home page and complete the enquiry form to book a meeting!
The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.