Married couples considering splitting their super contributions for tax-efficiency need not abandon these plans due to the proposed Budget changes.
Married couples considering splitting their super contributions for tax-efficiency need not abandon these plans due to the proposed Budget changes.
Navigator technical marketing manager, Martin Breckon said: "The proposed changes are just that proposals. A husband and wife who split their super contributions wisely might still benefit from tax savings, particularly if they still intend to access their super before the age of 60.
"And a large age difference between the partners opens up a whole new range of possibilities of reverse contribution splitting - which optimises tax-efficiency and even potentially social security benefits," he added.
Reverse contribution splitting refers to the process of the younger spouse splitting their contributions to the elder spouse, who will be able to take advantage of the benefits of super earlier.
"However, you might also decide to split to the younger spouse, particularly where the older spouse is reaching age pension age, because superannuation assets are only exempt from social security testing until this age," Martin said.
"Replacing the current age-based deductible contribution limits with an annual limit of A$50,000 regardless of age is a great savings tool for young investors keen to boost their savings future," Martin said.
Couples can still super-split - to top-up the superannuation savings of the lesser-earning partner - to maximise their future investment.
"The Budget changes mean that it is critical for people to consider their savings earlier in their working lives to maintain or improve their future lifestyles," said Martin.
Navigator offers considerable benefits during this accumulation phase. For example:
- Contributions can be split between spouses from 1 July 2006, offering tax-advantaged savings of up to A$20,000 under the current environment;
- For certain products, tax on contributions and earnings is remitted to the tax office after the end of the financial year, which means your money works harder, for longer;
- Navigator intends to take advantage of anti-detriment provisions across all products for death benefits paid from 1 July 2006, in addition to products currently already provided for. This means that in the event of death, certain beneficiaries could receive more than simply the account balance;
- Accounts with Navigator Personal Retirement Plan and Navigator Access Super can later be shifted to pension phase without incurring fees, charges or taxes; and
- The convenience of a simplified system of tax-effective wealth protection.
"Contribution splitting is not dead, otherwise the government would have proposed its removal as well. It just needs a little more thought and planning," said Martin.
"Contribution splitting can still help you get the most out of tax efficiency, life insurance, estate planning and social security."
-ends-
For further information please contact:
Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892
Mobile: 0407 966 632
Notes to editors:
- Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners is the Australian funds management arm of Aviva plc. Through these companies we provide products and services in the areas of wealth creation and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Aviva Australia is part of Aviva plc, the world's sixth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78.6 billion, and more than A$645 billion of assets under management (as at 7July 2005). The group has more than 60,000 employees and 30 million customers worldwide.
- The information in this document reflects Navigator Australia Limited's (Navigator) ABN 45 006 302 987 understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. A PDS is available from NULIS or your financial adviser. Applications to invest in investment product(s) through the investor directed portfolio service ("IDPS"), operated by Navigator, must be made by completing the application form attached to the applicable IDPS Guide Offer Document and Investment Allocation Authority. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances. Aviva does not receive any remuneration in relation to the provision of information available from this press release which is of a general nature only.