Debbie is 62 years old and works as an administration assistant. She earns $60,000 a year and has $180,000 in super. Debbie had planned to retire at 65 but now wants to cut back on work to care for her new grandchild.
After meeting with a financial adviser, Debbie decides to transfer most of her super into an Income account. She can then top up her salary with payments from her Income account and reduce her overall taxable income.
||Before TTR strategy
||After TTR strategy
|Payment from Income account
|Income tax payable
|Take home pay
1. No tax is payable on investment earnings and as Debbie is over 60, there is also no tax payable on income from her Income account.
2. Debbie is not claiming reduction of or exemption from the Medicare levy, using tax rate tables for 2014/2015 and Medicare levy of 2%.
3. The lower income tax offset has been applied to income tax payable for both strategies.
4. The amount of income payments using a TTR strategy that can be withdraw each year by Debbie must be between the minimum 4% and maximum 10% of the account balance (initially on opening and then annually as at 1 July).