How you should be investing as super caps change

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How you should be investing as super caps change
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Family trusts, investment companies – and holding assets in your own name – will help you minimise tax.

Consider your wealth management strategy as a jigsaw puzzle. In retirement, you can hold your wealth in super in a pension or accumulation account, while outside super you can hold wealth personally, jointly with your partner or through a trust or company. However, government rule changes can disrupt this carefully arranged configuration.

However, this decision is complex. You may already possess income-generating investments outside super, such as properties, a trust or company portfolio, or a defined benefit pension. These can consume your tax-free threshold, eliminating the incentive to create a $340,000 personal portfolio. Consequently, the tax on that same new personal portfolio could jump from nothing to at least 19 per cent, or even as high as 47 per cent.So before withdrawing any super above $1.

For couples, the order remains the same but equalising your super balances should be prioritised. It is inefficient to have $2 million in one person’s super and $1.4 million in the other’s when, with planning, both partners could hold $1.7 million tax-free.

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