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Using the CGT discount

A capital gain is a profit made from the sale of an asset, for example, real estate investments (the family home is exempt), a business or shares. Your capital gain is calculated as the difference between what you paid for the asset and what you eventually sold it for. A capital gain is considered by the ATO as part of your assessable income and is taxed at your marginal rate.

There is, however, a discount that may be applied to capital gains. If you have held the asset for over twelve months, you may be eligible for a 50% discount on the CGT. The CGT discount is also available to trusts and superannuation funds, although for superannuation funds the discount is only 33.3%. The discount is not available to companies.

Of course, there are occasions where you may have to dispose of an asset for less than you originally paid for it. Unfortunately, you are unable to use ‘capital losses’ to reduce your assessable income. However, you are able to carry the loss over to the subsequent income year and use it to offset future CGT liabilities.

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Understanding various kinds of super fees

February 16, 2018

No matter the kind of superfund you opt for, you will be subject to super fees. Understanding how these fees work and the difference they can make to your next egg is vital.

When it comes to superfund fees, there are two factors you need to get your head around; the kinds of fees you are being charged and the rate of fees you pay. Opting for a superfund based on these two factors can see you retire with hundreds of thousands more money.

You should be aware of the various types of fees you are being charged. If you would like to find out the fees you are being charged, you should do two things. Firstly, Google your fund’s product disclosure statement and scroll through to the fees section. You should see a list of different types of fees, with an explanation of what they are, how they are applied, and how often they will be incurred. Secondly, you should log in to your superfund account and take note of all the fees being charged to you. Investigate how closely these correspond and correlate with the product disclosure statement.

If you feel there are discrepancies, do not hesitate to contact your superfund or financial advisor and ask for clarification. It is worthwhile doing your research and comparing the fees you are being charged against other super funds and what they charge. Being complacent and not paying attention to your super is extremely irresponsible; the dividends you will receive later in life for being diligent now outweighs the burden of taking time to be informed today.

Some of the common super fees across the board include:

Another major factor contributing to how much you accumulate in your super account throughout your working life is the rate of fees you pay. Plain and simple, some funds offer much lower fees than other, creating a difference of hundreds of thousands of dollars when it comes time to retire.

Generally, funds are categorised into three groups; low super fees, medium super fees and high super fees. Ultimately, you want to be in a fund that charges low super fees. In saying this, it’s not only about super fees, as some funds have medium-high super fees but also perform better based on investment strategy, meaning you will get more back from your investments.