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ATO launches Super Scheme Smart

The Australian Tax Office has launched a new initiative called Super Scheme Smart to help educate individuals about the pitfalls of certain retirement planning schemes and how to protect their retirement nest egg.

Each year the ATO discovers complex tax schemes and arrangements designed by promoters solely for the purpose of helping people avoid tax.

The office is currently seeing a number of schemes targeting Australians planning for their retirement. These schemes encourage individuals to channel money inappropriately through their self-managed superannuation fund (SMSF).

The penalties are substantial for those involved in deliberate tax avoidance schemes; an individual may well lose their right to be a trustee of their own super fund, or, in some cases, they could go to jail.

According to the ATO, individuals most at risk are those approaching retirement.

While the retirement planning schemes can vary, common features people should be aware of include schemes that:

– are artificially contrived with complex structures usually connecting with an existing or newly created SMSF

– involve a significant amount of paper shuffling

– are designed to give the taxpayer minimal or zero tax, or even a tax refund

– aim to give a present day tax benefit by adopting the arrangement

– invariably sound ‘too good to be true’, and as such they generally are

Posted on 29 September '16 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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