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Cutting tax on share transfers

While the transfer of shares from an individual to their super fund will trigger a CGT event and therefore capital gains tax, there are ways individuals can minimise this.

Individuals can transfer shares to a self-managed superannuation fund (SMSF) by completing an off-market transfer, also known as an in-specie transfer. An off-market transfer is the transfer of securities between two parties without using the services of a stockbroker. It means that the shares in question do not have to be sold.

Because the sale involves changing the beneficial ownership structure of the shares from an individual’s personal name to the name of the super fund, it may trigger a capital gains event.

A capital gains event means that an individual may have to pay capital gains tax if they made a profit on the shares being sold. One way to minimise the tax payable is to group transfers of shares with losses with any shares that have gains, which can offset the probability of paying tax.

Alternatively, individuals can also maximise their concessional contributions in the year in which the share transfer occurs via salary sacrifice, which can lower their taxable income and thus lower their capital gains liability.

To manage their tax liability more efficiently, individuals should consider transferring different tranches or combinations of tranches over several financial years. Seeking professional advice can help when calculating capital gains tax or combinations mentioned above.

Posted on 20 January '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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