Reduce tax by merging your super into one fund

This strategy is suitable if you belong to more than one super fund, one of which must have a pre-July 1983 component.

By keeping any super benefits that include a pre-July 1983 component and merging this benefit with your other super benefits, you can lower the lump sum tax you may have to pay. This is due to the fact that the valuable pre-July 1983 service period, which previously only applied to one fund, will now apply to the combined benefit.

The effect of this strategy is that you increase your pre-July 1983 component (where only 5 of the benefit is taxed at your marginal tax rate) and decrease your post-June 1983 component (which could be taxed as high as 21.5).

How does the strategy work?

To use this strategy, you need to notify your super fund and complete a Transfer Authority. This form will enable you to advise which funds you want to transfer benefits to and from. On completion of this form, the super fund will handle all the necessary paperwork for you.

The Benefits

• This strategy can create significant tax savings if you intend to withdraw your benefits as a lump sum.
• Having one fund makes it easier to keep track of your super investments.
• You may also save on fees and charges.