Super Tax Traps: Capital Gains & Retirement

0:00Here's more Adelaide news for March 15th. Selling shares for a big capital gain can trigger unexpected taxes beyond just the usual capital gains tax. One listener paid their capital gains tax to the Australian taxation office after caching in old bonus shares, but the profit pushed their income over $250,000. That led to a demand for extra division 293 tax on their super contributions. This extra tax hits at 15% on super contributions when income tops that threshold. The gain also gets added to taxable income, potentially bumping someone into a higher tax bracket. Plus, it can cut into family tax benefits, child care subsidies, child support, and various offsets. Many feel this setup acts like double taxation during a one-off high income year. Four planning helps, like timing sales for lower income years or maximizing deductions. Still, changes to capital gains rules seem unlikely anytime soon.

1:01Meanwhile, another couple faced trouble when their financial advisor accidentally closed the husband's super account right after he retired at 60. They wanted to keep adding savings, including a gift from family, but now hit contribution limits and face tax on outside interest. At age 65, super access opens up fully with no work conditions needed. This includes starting a tax-free retirement income stream, cashing out for big needs like paying off debt or leaving it invested while working. Contacting your super fund is the best first step. The Daily News Now is grateful to our sponsor for today's episode. It is a pillow that plays your podcast and music without earbuds. Built for listening in bed, solypillo.com