Superannuation is an arrangement regulated by legislation which gives citizens of Australia funds available to them after their age of retirement. Australia has minimum standards for superannuation payments which are required to be paid by employers. The general base amount for superannuation is a payment of 9% but is scheduled for a yearly increase until the year 2020 where it will become a rate of 12%.
Superannuation can be held in many different forms; an accumulation fund, defined benefit or self-managed fund. All of these funds are governed strictly by Federal legislation. Individuals are allowed to withdraw monies from their preserved benefits when they reach a preservation age. Employer contributions are required to be paid to the fund at least every 3 months.
Date of Birth Preservation Age
Before 1 July 1960 55
1 July 1960 to 30 June 1961 56
1 July 1961 to 30 June 1962 57
1 July 1962 to 30 June 1963 58
1 July 1963 to 30 June 1964 59
In addition to this, individuals are able to make personal contributions which may receive a tax benefit on each financial year.
Superannuation can also be dealt with in Orders made in matrimonial proceedings under “superannuation splitting payments”. The Family Law team of lawyers at Pearce Webster Dugdales are well able to advise you in relation to a superannuation splitting payment in addition to other matrimonial issues.
Self-Managed Super Funds (“SMSF”)
SMSFs are regulated by the Australian Taxation Office and can have no more than four members. The members must be trustees or directors of a corporate trustee, and the trustees must be members. Some advantages of SMSFs are:
- Investment- the ability to have more sophisticated investment strategies working for you;
- Tax– allowing the Trustees greater flexibility and control over the tax position of the fund and also in dealing with the tax liabilities;
- Estate Planning– as your Will does not necessarily control your super-annuation benefits, this enables you to control income streams to beneficiaries and you can also set up binding nominations that will not lapse. Many clients use an SMSF as a vehicle to hold assets including real property.
- Cost – potentially if managed correctly, the administration costs of your SMSF should be cost-effective compared to commercial super funds.
Issues may arise:
- if the SMSF Trust Deed is lost, improperly executed or incorrectly amended;
- as to the form, timing and execution of nomination of beneficiaries;
- with proposed new trustee appointments;
- when joint trustees are not in agreement;
- with incapacity of a trustee.
Pearce Webster Dugdales can assist with superannuation enquiries and can provide further assistance with recommendations of accountants and other industry professionals in relation to setting up self-managed superannuation funds as an employer, or if you believe your employer is breaching their obligations.