We are quitting work and travelling around Australia. How will it affect our super?

Q. My partner and I regularly listen to your financial advice segment on Radio 4GR Toowoomba on Sundays. Congratulations on a very interesting show.

We are aged 57 and 52 respectively, currently working full time and we each have superannuation policies. Later this year we plan to resign from our jobs and go on a working holiday around Australia for an indefinite period.

We are both going to roll over our superannuation policies. Also we plan to set up an ABN as this seems to be a requirement of some of the farms on which we are going to work.

In order to avoid fees eating up what we have saved in our superannuation policies we are going to make regular payments into our respective policies.

We have two questions

1. are there any tax advantages in making payments into our superannuation policies from our joint ABN account; and

2. is there a set % requirement based on the gross as to what we are required to pay into our superannuation policies e.g 9% or as self employed is that up to us.

We hope you can help. Looking forward to your reply

Josies answer: Thank you listening to Money Matters and I greatly appreciate your feedback. I am having so much fun and thoroughly enjoy answering questions on the radio and this website.

It is obvious there is such a great need for this type of service. Read more

I am business owner and I am questioning my accountant’s advice.

Q. We are business owners and our accountant has us pay a designated amount into super each month. We are reluctant to do this at the moment and have that amount lose money immediately when banks are offering over 8%. Should we try to delay these payments?

Josie’s answer: I am finding that many people are asking similar questions. Why put my money into superannuation when they might get a higher return by investing in a cash management account or term deposit outside of super. This is where a little research and homework will make it a lot clearer and thank you for asking this great question.

When thinking of superannuation, do not think of it as an investment. This is a common mistake. Superannuation is simply a trust which offers amazing tax concessions. For example, if you had a family trust, would you be asking the same question? Probably not.

Firstly, I will discuss the tax benefits. Lets say your monthly contribution to superannuation Read more

Financial Hell - Please help!

Q. I could really do with some help. I have been trying to sort my finances out for the last 5 years but spending a lot of energy standing still.

After ten years of marriage my wife decided she didn’t want to be married anymore.

My ex-wife retained the majority of the matrimonial assets such as our flat and car. I accumulated a debt of $20k from legal bills etc as it took a long time to arrive at a property settlement. The debt is sitting on five credit cards which I planned to close and consolidate into a personal loan as soon as possible.

However, after the five years I still can not obtain a personal loan. I naturally had to find a new place to live and I have had three changes in job in the last three years due to factors such as contract work.

I now have almost completed 3 months in a permanent on-going position with a university. I have cut my personal budget back to the absolute bare minimum and kept up the interest payments on the credit cards but I do not have perfectly clean bills.

I have tried banks, credit unions etc but with no success in terms of debt consolidation. I have been advised with a salary of $53,500 that I would have no problem servicing a loan but can only apply for unsecured loans as I have no security.

The debt is starting to become more difficult to manage. Can you suggest or offer any other options, strategies or suggestions besides a debt agreement or bankruptcy?.

Josie’s answer: You really have been through a lot in recent years. It appears that your ex-wife received the goldmine and you got the shaft.

I am also tired of hearing stories of people struggling to get out of debt because of lawyer Read more

Does an employer have to pay Super to someone who is working 24 hours per week?

Q. Does an employer have to pay the superannuation guarantee charge to someone who is working 24 hours per week?

Josie’s answer: Yes, they do, however, they are exempt from paying super for the following:-· employees paid less than $450 in a calendar month· those aged aged 70 years or more· employees less than 18 years of age and working less than 30 hours per week· non resident employees· employees who are paid for domestic or private work, less than 30 hours per week. Read more

Do I get a refund of tax when my super is negative?

Q. Investment earnings in superannuation are taxed at 15%. What happens when your super fund makes a loss? (as may well be for me again this year). Is there no tax? Is there a credit (I wish) or is the loss offset in future years within the fund?

Josie’s answer: This is a really good question and one I am sure lots of visitors to www.askjosiekay.com and listeners of Money Matters will have similar thoughts.

I am also assuming that your superannuation contributions are invested in an industry or retail superannuation fund (in other words, they are managed funds). You are right in stating that investment earnings in superannuation funds are taxed at 15%, however, this the maximum they pay.

In reality, they are probably paying a lot less, particularly if they are invested in shares as they can offset imputation credits attached to shares (in simple terms, they get a refund of any company tax, up to 30%, that may have been paid on the dividend when it is passed on to superannuation fund).

Therefore, you are probably paying a lot less than 15% and may even get a rebate of excess franking credits. I know a bit technical, but this is a good thing. Read more

My Self Managed Super Fund is too volatile and expensive.

Q. My Husband and I have a SMSF (at the suggestion of our Adviser) of about $600K, I have an Industry Fund i.e. First State Super (NSW) of around $99K, with a diversified portfolio we are paying our adviser 1.25%, plus the accountant for the Tax return.

During the times of extreme volatility the Industry fund was not “hammered” nearly as much as our own fund, we are considering moving all funds to the Industry,as the fees are much less. Can or should we and what could be the implications e.g. CGT etc We are both 57 and not working and may need to draw down in the near future.Josie’s answer: As you did not mention where your funds are invested within your Self Managed Superannuation Fund (SMSF) it is difficult for me to provide an opinion as to whether you should redeem these investments and transfer to an industry fund, such as First State Super (NSW). However, I would like you to think about the following:-

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