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If you're age 60-64, and still working or looking for work, you can use a TTR income strategy to:
- Supplement your income if you reduce your work hours, or
- Boost your super and save on tax while you keep working full time.
How much do you need to invest?
You can start a BUSSQ TTR income account by transferring some of your super, at least $25,000, from your BUSSQ super account or any other super account you may have. You need to keep some money in your super account to continue to receive your employer's compulsory contributions, or any voluntary contributions you make.
Use a TTR strategy to reduce work hours
If you want to reduce the hours you work and you're aged 60-64, a TTR strategy can top up your income and can be tax effective as well.
PROS
- Continue to receive super contributions – This helps to replace the money you take out
- Pay less tax – Your TTR income payments are tax free. Investment earnings are taxed at the concessional rate of 15%, unless your Total Superannuation Balance (TSB) is over $3 million.1
- Ease into retirement – You can start planning what you'll do with your leisure time before you completely retire.
CONS
- May affect your retirement income - If you start drawing down your super early you may have less money when you retire.
- You must withdraw at least 4% of your TTR income account balance each financial year.
- You can only withdraw a maximum of 10% of your TTR income account balance each financial year.
Let's take a look at how a TTR strategy helped Steve reduce his work hours, but not his pay.
Steve, who has just turned 60, has $150,000 saved in super. He currently earns $75,000 a year before tax, so his take home pay is $2,326 per fortnight. Steve wants to cut back his hours to four days a week, but he doesn't want to reduce his fortnightly pay. After talking with a BUSSQ rep, Steve learns he can:
- Cut back his hours to four days a week and receive $1,861 per fortnight
- Open a TTR account and request a fortnightly payment of $465.
This means Steve can not only enjoy his extra day off, but he can do so without losing any of his pay.2
Using your TTR to save on tax
You can use your TTR income to grow your super and pay less tax in the lead up to retirement. This strategy works best if you are 60 or older and a mid to upper income earner.
PROS
- Boost your super – A TTR income can be used with salary sacrificing to top up your super as you approach retirement.
- Save tax – Salary sacrifice contributions are generally taxed at 15% in your super fund, which may be lower than your marginal tax rate. Your salary sacrifice contributions, employer contributions and any other concessional contributions count towards the annual concessional contributions cap of $32,500. Investment earnings in an accumulation account are generally taxed at up to 15%. Additional tax may apply to some earnings if your Total Superannuation Balance (TSB) is over $3 million1.
- Pay less tax on income – Your TTR income payments are tax free.
CONS
- Complexity – You may need to pay for financial advice to understand if a TTR income account strategy is for you.
Let's see how Kyle uses his TTR to reduce tax
Kyle is also age 60. He earns $75,000 a year and has $150,000 saved in super. Kyle plans to retire at age 67. So, with only a few years to go, he wants to do everything he can to boost his super savings.
After talking with his financial planner, he learns he can:
- Contribute an extra $1,250 each month ($15,000 or 20% per year) using salary sacrifice, which reduces his taxable income
- Open a TTR account and request a monthly payment of $841.67 ($10,100 per year), which will be paid tax free because he is over 60.
This means over seven years Kyle will add net contributions of $18,550 to his super without affecting his take home pay.2
Flexibility
With a BUSSQ TTR Income account you are not locked into any particular investment strategy if you don't want to be. BUSSQ gives you the flexibility to move your investments around at any time. You also have the flexibility to design your own investment mix. There are a range of options from which you can choose, or you can choose The Smart Income Strategy where the mix is determined for you. Details of these are available online or in the Income account PDS.
Minimum and maximum limits
The federal government has set annual minimum and maximum payment limits.
Minimum and maximum payment limits are calculated when your income account starts and then annually thereafter on 1 July. You also have the flexibility to decide, at any time, how much over and above your minimum limit you may wish to receive in payments for the next year, providing it is lower than your maximum payment limit.
Fees
The fees you pay for this account will vary based on the investment options that you select. For more information, please refer to the Income account PDS.
Getting started
To open your TTR Income account give us a call on 1800 692 877 or download the Income account PDS and complete and return the Join BUSSQ Income account form.
Want to find out more?
If you're looking for some sound personal advice on which is the best way forward for you, we can help. As a BUSSQ member you have access to personal financial advice on contributions, investment choice and retirement and at no extra cost^. Find out more or call us on 1800 692 877.
