This document provides an overview and summary of recent superannuation updates and policy changes: 1) The government announced changes in 2013 to tax the earnings of superannuation assets supporting income streams over $100,000 at 15% from July 2014. 2) The current superannuation system allows tax-free superannuation for those over 60, limits on contributions, and flexible pension payment rules. 3) A "transition to retirement" strategy was presented, using a non-commutable allocated pension to boost superannuation for retirement while maintaining current income through salary sacrificing and pension payments.

1. Superannuation Update
August 2013
Mark Gibson CA
CA SMSF Specialist
Registered Tax Agent
ASIC Registered SMSF Auditor
Director, Melmerby Pty Ltd AFSL 238 039
Authorised Representative ASIC No 291 756
Sage Advisers
801 Glenferrie Road
Hawthorn VIC 3122
Ph: +61 3 9818 8810
www.sageadvisers.com.au
mg@sageadvisers.com.au

2. Overview
 April 2013 Government announcements
 Current system for superannuation
 Transition to retirement strategy, plus case study
 Superannuation Guarantee
 Key points to remember

3. April 2013 Government Announcements
 Changes to tax treatment of earnings on superannuation assets
supporting income streams
 From 1 July 2014 earnings above $100,000 will be taxed at same rate
that applies to earnings in the accumulation phase (15%)
 For assets purchased before 5 April 2013 the reform will only apply to
capital gains that accrue after 1 July 2024
 For assets purchased from 5 April 2013 to 30 June 2014 will have
choice to apply the reform to entire capital gain or only that part that
accrues after 1 July 2014
 For assets purchased after 1 July 2014 the reform will apply to the
entire capital gain
 No legislation has been introduced prior to 2013 election (opposition
has yet to decided whether to support change)

4. What is the current super system?
Last substantial overhaul of complex super system
occurred in 2007 introducing:
 Tax-free super for 60+ pension accounts
 Reasonable Benefit Limits (RBLs) abolished
 Compulsory cashing abolished so you can maintain
super in accumulation phase indefinitely

5. Tax-free super if you’re 60 or over
 Lump sums or pension payments are tax free
from age 60
 Benefit does not form part of assessable income
from age 60
 Good reason to consider super over other forms
of investment structures

6. Limits on non-concessional (undeducted)
contributions
 There is a $150,000 annual limit on non-concessional
(undeducted) contributions, but if you’re under 65, you
can contribute up to $450,000, averaged over three years
 Anything over the limits will be taxed at top marginal rate
of 46.5 per cent

7. Limits on concessional (deductible)
contributions
Concessional Contribution
Cap from 1 July 2013
Under 59 $25,000
59+ $35,000
Limits
 Excess concessional contributions taxed at marginal
rates plus an interest charge
 Individual has option to withdraw excess amount from
super (net of 15% fund tax)

8. Super incentives for self-employed people
 Personal concessional contributions by self-
employed individuals will be fully tax deductible
 Must satisfy maximum earnings test (10%)
 Self-employed individuals may also be eligible for
the Government co-contribution

9. Pension payments
Simplified rules for pensions drawn from your super:
 No maximum limit on your pension payment*
 Lower minimum payment limits 2013/14:
•4 per cent of balance if you’re aged between 55 and 64
•5 per cent of balance if you’re aged between 65 and 74
•6 per cent of balance if you’re aged between 75 and 79
•7 per cent of balance if you’re aged between 80 and 84
* Special rules apply to non-commutable allocated pensions
or NCAPs (max limit of 10%)

10. Transition to retirement strategy
 Problem – how to boost your super as you transition to retirement
without lowering your current income
 Solution – a strategy based around accessing your super through a
non-commutable allocated pension (NCAP)
 Action steps
• Continue to work
• Boost your super with salary sacrifice payments
• Maintain current income with an NCAP
 Result – a super boost for your retirement

11. NCAPs in a nutshell
 Non-commutable allocated pensions (NCAPs) can only be
started once you reach preservation age
 Purchased with superannuation money
 No work test requirement
 Minimum (age based) and maximum (10%) income limits
apply
 Lump sum withdrawals (commutations) generally not
allowed
 Usual to convert to allocated pension at age 65 or when
retire

12. Preservation Age
If your date of birth is: Your preservation age is:
Before 1 July 1960 55
Between 1 July 1960 and 30 June 1961 56
Between 1 July 1961 and 30 June 1962 57
Between 1 July 1962 and 30 June 1963 58
Between 1 July 1963 and 30 June 1964 59
After 30 June 1964 60

13. Boost your super
 Once you’ve reached your preservation age, continue to
work at your present level
 Purchase an NCAP with your superannuation money
 Salary sacrifice into your super account
(employer must agree)
 Maintain current income by drawing a pension from your
NCAP
 Tax advantages mean your income stays the same but
your super balance receives a boost

14. Trevor’s story
 Trevor, 55, wants to retire at 65 and work full-time until then
 He earns $60,000 per year - $48,153 after tax and Medicare levy
 Trevor has $300,000 in super
 Trevor rolls over all his super into an NCAP and chooses a annual
pension payment of $15,780 in 1st year to maintain his net income
 He salary sacrifices $19,600 (Year 1) into super and receives the
same net income of $48,153 after tax and Medicare levy
The projections in this strategy are based on various assumptions, including but not limited to: pension payment = $15,780
in year 1; salary sacrifice = $19,450 in year 1; no change in take-home pay before/after strategy; no change in risk profile;
estimated investment return = 5.9% pa (super), all investment earnings figures are after tax and after fees; Super
Guarantee contributions, i.e. 9.25% of $60,000; ongoing administration fees are not included.

15. Trevor’s position without the strategy
Salary
package
Salary $60,000
Take Home
Income
$48,153
9.25% Super
Guarantee
Super account
balance
$300,000

16. An NCAP gives Trevor a super boost
Salary
package
Salary $60,550
Take Home
Income
$48,153
Salary sacrifice
$19,450 +9.25% SG
New super
NCAP $300,000
Pension of $15,780

17. Trevor’s estimated gain
By using this strategy Trevor will have built an extra amount
of around $70,000 in super by age 65
 The increase is due to tax treatment and is not a result of
a change in investment strategy
 By making additional salary sacrifice contributions Trevor
could increase his super still further
 There is flexibility to adjust payments to ensure Trevor’s
income keeps up with CPI or salary increases

18. Trevor’s estimated gain
0
100000
200000
300000
400000
500000
600000
700000
55 56 57 58 59 60 61 62 63 64 65
TotalAccountBalance$
Age
Current
TRIS
The projections in this
strategy are based on
various assumptions,
including but not limited
to: pension payment =
$15,780 in year 1; salary
sacrifice = $19,450 in
year 1; no change in
take-home pay
before/after strategy; no
change in risk profile;
estimated investment
return = 5.9% pa
(super); all investment
earnings figures are
after tax; no change in
Super Guarantee
contributions, i.e. 9.25%
of $60,000; ongoing
administration fees are
not included.

19. Superannuation Guarantee
Employer requirements as a % of ordinary time earnings:
• 9.00 per cent for 2012/13 financial year
• 9.25 per cent for 2013/14 financial year
• 9.50 per cent for 2014/15 financial year
• 10.00 per cent for 2015/16 financial year
• 10.50 per cent for 2016/17 financial year
• 11.00 per cent for 2017/18 financial year
• 11.50 per cent for 2018/19 financial year
• 12.00 per cent for 2019/20 and later years
• Minimum salary $450 per month; maximum salary $192,160 pa

20. Key points to remember
 Lump sum withdrawals and income stream payments are
tax free from age 60
 Transition to retirement strategy using an NCAP should be
considered by people over 55 and still working
 Possible changes to tax treatment of pension income post
2013 election
 You must seek personal advice

21. Contact
Mark Gibson CA
SMSF Specialist, Institute of Chartered Accountants in Australia
Registered Tax Agent
ASIC Registered SMSF Auditor
Director, Melmerby Pty Ltd AFSL 238 039
Authorised Representative ASIC No 291 756
Sage Advisers
801 Glenferrie Road
Hawthorn VIC 3122
Ph: +61 3 9818 8810
www.sageadvisers.com.au
mg@sageadvisers.com.au

22. Disclaimer
Important information
This presentation has been prepared by Mark Gibson CA, authorised representative (ASIC No
291756) of Melmerby Pty Ltd ABN 18 105 504 701, AFS Licence No. 238039, to provide you with
general information only. Mark Gibson is a registered tax agent, an ASIC registered SMSF Auditor
and accredited CA SMSF Specialist with the ICAA. It is not intended to take the place of
professional advice and you should not take action on specific issues in reliance on this
information. It is not intended that it be relied on by recipients for the purpose of making
investment and/or business decisions. Before making an investment decision, you need to
consider (with or without the assistance of an adviser) whether this information is appropriate to
your needs, objectives and circumstances. You should obtain a copy of any relevant Product
Disclosure Statement (PDS) before making a decision to invest in any financial product. PDS copies
can be obtained by contacting us. Every effort has been made to ensure that the presentation is
accurate, however it is not intended to be a complete description of the matters described.
Melmerby provides no warranty as to the accuracy, reliability or completeness of information
which is contained in this presentation. Except insofar as any liability under statute cannot be
excluded, Melmerby, its employees and authorised representatives do not accept any liability for
any error or omission or for any resulting loss or damage suffered by the recipient or any other
person. This information is provided for persons in Australia only.