Imagine a place where you pay no Income Tax. You can sell your investments and pay no Capital Gains Tax. Where, if you don’t have a big enough investment portfolio, you can receive a fortnightly income stream paid to you for the rest of your life.This place exists and it’s right here. It is the Australian Retirement Incomes Policy.
If you’re still worried about the tax paid for contributions to your Super fund, then you’re missing the whole point of the Superannuation system that we currently live in.
And it is this: If you keep your wealth inside the Super System, then when it comes time to retire, most people will be able to live tax free for the rest of their lives.
Due to our current cost of living including the costs to buy a home in Australia, many people are starting to employ a strategy which involves purchasing multiple investment properties in a Self Managed Super Fund with the intention of living in one of them after retirement. With no tax to pay.
There’s a bit of juggling to do at retirement for those people but it may just be the only chance some people have to own their own home.
How do we compare?
While working Australians are taxed pretty heavily by world standards, the reverse is true for our retirees. In the UK, pensioners are taxed at normal marginal tax rates, Americans are charged 10% on lump sum withdrawals from their pension accounts and Germans can pay up to a 1/3 of their pension income in tax.
Even our Kiwi cousins across the ditch pay tax on their pensions from 10.5% to 33%.
We have a really good system here that is the envy of people all over the world and yet very few of us take enough interest in their Super to make a difference until it’s too late.
Tip for the day: Put as much money as you possily can into your Super. It will pay you back in buckets.
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