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SMSF withdrawals and their tax implications

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I have a self-managed super fund and I am old enough to retire but I like to work. I am wondering about the tax implications of my decision. Could you help me out?

A SMSF can have a member who is retired but doesn’t take a pension. This would mean the entire fund would still be in what is called the accumulation phase, which also means the fund pays tax.

If you want money, you can take lump sums, but this means the fund pays tax on income and any capital gain if the fund’s investments are sold to actually fund the lump sum.

The super experts suggest there’s an alternative way to look at the situation. You could take a pension at the minimum rate, which means the fund is in pension phase and pays no tax. If you want a lump sum, you can take it as a variation on your pension and as there’s no limit to what pension is paid, it can work out nicely for many people.

The best bit is that you won’t pay tax on any income or capital gains that the fund makes and that’s a pretty appealing feature of this strategy.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Thursday, August 25, 2011

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer, Roger Montgomery, Paul Rickard and Charlie Aitken the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

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