B Invested


Contributor: Ridhwan Hannan, Senior Tax Advisor from OnePath Accountants


Compulsory superannuation contributions have now been in Australia for 25 years.

Back in the 80’s, it was only the financially savvy, rich and elite that dabbled with stock markets and investment funds.

Today, every working Australian citizen has to think about how to invest their superannuation.

The thing is, only a minority of people actively do anything about it.


When it comes to super, most people cruise along in neutral. Their employer pays their super into a retail fund and that’s all they know.

Maybe it’s a hangover to the days when employers chose super funds. Maybe it’s because super seems complicated, that people default to easiest option, letting someone else worry about it.

It’s not necessarily a bad thing. Generally retail funds are very competitive, especially if you have less than $200,000 in your super balance.

However, by not actively contributing to your fund, or having a say over how your super is managed, the end results may not be ideal for your needs.


Everyone should ask their accountant or financial planner about making additional contributions to their super. This can help grow your next egg faster or open new investment opportunities such as property.

However, there is only a short window or opportunity to transfer large sums into your super before July this year.

While this is called ‘salary sacrifice’ the biggest thing you actually sacrifice is your tax payments!

The money that hits your bank account is taxed at a standard rate, which could be as high as 49%. However, money that flows to super can be taxed at just 15%.

Currently, you may still be able to salary sacrifice up to $35,000 at the 15% tax rate. After July 1, 2017 these contributions will be limited to just $25,000. Any additional salary sacrifices will be taxed at your normal rate.

You can also make after tax (non-concessional) contributions to your super yourself. You won’t get a tax break, but you can help your super balance grow.

This is handy if you have just sold an investment, downsized the family home or received an inheritance. As of July 1, 2017 the limit for these contributions falls to just $100,000 per annum.
If you have money you want to contribute before July 1, 2017 then you need to move quick before the contribution limits are reduced.

You may still be able to transfer up to $540,000 in after tax income this financial year if you act quickly.


There are many benefits to Self-Managed Super Funds (SMSF’s). Don’t rule them out just because you don’t have a big balance. Here are just some of the upsides of self-managed super funds.

• You and your partner or family members can pool your super together in one fund


• You can have much more control over how your money is invested


• You can leverage other people’s (banks) money by borrowing within a SMSF through a limited recourse borrowing arrangement (LRBA) to purchase commercial or residential property.


• You can buy property through your super:
– Commercial properties inside super can be occupied by the business owners
– All property expenses are paid for by the SMSF
– Capital gains tax on assets held for over 12 months is just 10% (pre-pension phase) or 0% (pension phase)
– Income tax for income generated by your super is capped at 15%
– Tax on rent during the pension phase is 0%

The biggest benefit to SMSF’s are their flexibility in reducing tax payable. There is no other legal way to reduce tax to the extent that SMSF’s can achieve.


While investing in property through super obviously has clear benefits, there are also some big differences as well. Here are some limitations you need to be aware of.

• Residential properties can generally never be personally occupied, unless it’s a business premises.

• When it comes to lending, equity cannot be leveraged or withdrawn and properties cannot be cross-collateralized.

• Large deposits and low loan to value ratios are required.

• Off the plan properties are not favoured by lenders for SMSF loans.

• Properties cannot be ‘improved’ they can only be repaired or brought back to tenantable condition.




Setting up and running a self-managed super fund does come with significant costs. By running your own super fund you are required to meet legal reporting and audit requirements. Your accountant and financial planner can take care of this for you. In the end, you need to weigh up whether the management costs are worth it when compared to your expected returns.


At the moment the Australian Taxation Office recommends having a minimum balance of $200,000 in your super before setting up a SMSF.

However, everyone’s situation is different. For example it may not be a bad idea if you intend to leverage via a loan, to combine balances together or contribute a larger lump sum soon to accelerate your retirement savings.

Whatever your situation, you can definitely benefit from knowing exactly what their super management options are. If you want to take more control of your super it’s worth speaking to your accountant and financial planner about your superannuation strategy.

Ridhwan Hannan is a property investor and a Senior Tax Advisor from OnePath Accountants
You can contact Ridhwan at ridhwan@onepathaccountants.com.au or 1300 686 069