Question 1

Thanks for your helpful articles. I am 64 years old (fortuitously turning 65 on the 30th June, the end of the financial year).

My industry super fund has a balance over $500,000. In FY2024, I sold an investment property and was lucky enough to create an ATO Capital Gains Tax liability of approximately $29,000.

Prior to June 30, 2024, I deposited the $27,500 (2024 maximum contribution), and paid $4125 tax at a rate of only 15 per cent. This action significantly helped reduce my tax liability.

Should I be making any top-up contributions to my super this FY2025? Might that help reduce my ongoing debt to the ATO?

As you have a balance over $500,000 in super you can only use the standard concessional (pre-tax) cap of $30,000. Unless your total super balance was below $500,000 as at 30 June 2024.

As you have stated these (concessional) contributions are taxed at only 15 per cent which could be a lot lower than your normal marginal income tax rate (see below table for current income tax rates).

When you do make a capital gain, the additional income is added to your other taxable income – therefore maximising your concessional contributions can be very effective.

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For this financial year, you would need to assess what your taxable income would be and then work out whether to make concessional contributions to reduce that figure.

All taxable income, including capital gains, is added together for income tax purposes.

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For example, if you were going to have taxable income of $50,000 (made up of income from work, interest and capital gains). Making a $20,000 concessional contribution would reduce this figure to $30,000 and income tax payable would be based on this amount.

Question 2

I am just over 60 years of age and am no longer working. My spouse is in her mid-50s and has no plans for retirement in the near future. 

I have commenced an account-based pension for the current full transfer balance cap, however, I will still have several hundred thousand destined to remain in the accumulation phase. 

My partner has around $500,000 in super and makes the maximum concessional contributions allowable from her wage, but has no history of non-concessional contributions.

Can you suggest any strategies to better deal with the amount remaining in my accumulation fund, and if there are any additional taxes imposed if a lump sum is required as part of any strategy you suggest?

Congratulations on reaching the transfer balance cap amount. This means you have built up a very nice amount for retirement.

If you have fully used your transfer balance cap, then you cannot start a pension with any more money. The transfer balance cap will be $2,000,000 in 2025/26. As your partner is a long way short of this you could consider withdrawing some funds in your accumulation account and contributing to your wife’s accumulation account as an after tax (non-concessional) contribution.

There are no taxes to be paid on the withdrawal, as you are over 60, and there are no taxes paid on the contribution. The advantage of this is your partner can eventually start a larger pension when eligible. And combined, you will then have a large amount in pension funds, then otherwise would be the case. Pension funds attract no tax on earnings and no tax on payments.

Just be mindful that your partner can’t access her super until she retires after 60 or reaches age 65. Also ensure your partner does not breach the non-concessional cap.

 Question 3

All of our savings are in our super and pension funds. Should we use the financial adviser connected to the fund?

It depends.

If you are comfortable with the performance, fees and service from your current fund, and not looking to move, then speaking with a financial adviser employed by the fund can make sense.

They can advise on how to best make use of your current products and the associated strategies. This could include which investment options to invest in, contribution and drawdown strategies plus any insurance you can have within the fund and general retirement planning.

The super funds themselves have different advice offerings so you would need to ascertain what is possible and at what cost. Some funds provide basic advice from a financial adviser as part of your membership fee whilst there may be a broader service for an additional fee.

If you have other financial objectives, then seeing a financial adviser external to your super fund may be more appropriate. They can advise on a wider range of products and strategies, including non-super related. They can deal with more complex arrangements and offer ongoing service arrangements where appropriate.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.