How to invest with 0% tax

Only the super rich can do it, right? Offshore in Majorca or Jersey. The best option we have in Australia to invest with 0% tax is super, and its 100% legal!

Once you have reached your preservation age and retire, you can convert your super into a pension which attracts 0% tax. That’s 0% on all investment earnings, and if you are over age 60, 0% on withdrawals (those under age 60 will receive a 15% tax offset on withdrawals).

Now if your retirement is still some way off, the good news is that your earnings are taxed at the concessional rate of 15%. This means super is still a very attractive savings vehicle, even before you reach tax free status. 

There is a catch, being that the maximum an individual can transfer into the tax free pension status is $1.6 million, so if you are in the fortunate position to have more than that, then more careful planning is required to:

  • Maximise your entitlement as an individual.
  • Maximise your entitlement as a couple i.e. how you split it with your partner.
  • Create a plan for how you invest surplus funds outside of super.

Super really is that good. It is a purpose built structure for retirement, made attractive by the government to encourage you to save and self fund yourself. Paul Keating realised in the 80’s that it would not be sustainable long term to have everyone on the Age Pension and this is why he introduced it. It’s also the reason that super is likely to remain a highly tax advantaged structure, in order to continue encouraging people to save.

The main challenge with maximising your super is actually having a plan to get as much as you can in there that you can afford to put aside for retirement. There are limits on what you can put in and they are getting tighter as time goes by, so planning for how you maximise your super really is important to how comfortable you are in retirement.

Speak to one of our degree qualified advisers about how this relates to you.

Related FAQ's

How much can I contribute to super?
When can I access my super?

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The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions.  Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.