So far in Step 7 Retirement Planning, we have discussed what a retirement plan is as well as the best way to structure your retirement plan.
In this final instalment, we talk tax points, the different tax rates and were also include a free Retirement Plan Checklist for your use.
Here are some general points on tax and how they apply to different types of entities:
- Taxed on their marginal rates. For 2009/10 these rates are:
|$0 to $6,000||0%|
|$6,001 to $34,000||15%|
|$34,001 to $80,000||30%|
|$80,001 to $180,000||38%|
- Residents also pay 1.5% Medicare Levy
- Generally doesn’t pay tax if the trustee distributes its income. Income is taxed to beneficiaries
- Pay tax a 30%
- Pay tax at 15% (or 0% on superannuation accounts paying a pension)
It is clear from the examples used above that you need to consider structure and taxation when developing your retirement plan.
Retirement Plan Checklist:
- Your business is an integral part of your asset accumulation strategy
- You must work out how much income you need in retirement and when you would like to retire, and then work backwards to determine how much you need
- Structure and taxation are two of the key elements to increasing your wealth over time. The more of your income you have to reinvest, the greater the long term compounding effect of returns over time. The more tax you pay, the lower amount of your capital invested.
That now brings us to the end of Step 7 in becoming Financially Well Organised. Make sure you join us next week, with the start of Step 8, Business Plan.
Would you like to be in a position to choose the date you retire? Call elliotts today on 07 3833 3999 or email firstname.lastname@example.org.