While some parents are able, and happy, to help adult children with a contribution for a great overseas holiday, most parents are looking at sensible options to gift for more long-term well-being and financial security such as helping with a home deposit. In this context, is it possible or permissible for parents to put money via a non-concessional contribution into the adult child’s super account directly, so there’s no travel through their bank account, where it could be waylaid and misspent?
Anybody can make a non-concessional superannuation contribution into another person’s super account. The downside is that the money is inaccessible by anybody until the child reaches their preservation age, which could be many years in the future.
Anybody can make a non-concessional superannuation contribution into another person’s super account.Credit: Simon Letch
A better strategy would be to keep the money in your own name, so you’ve got control.
If you’ve got doubts about their ability to handle the money, leave it to them in your will through a testamentary trust, which will be controlled by the trustee – and not the child.
I am 70 and have reached my super cap due to a combination of the notional value of my defined benefit pension and my super fund, which is in pension mode. Can I still make non-concessional contributions to my accumulation account in my industry fund? I’m told there are no limits on accumulation accounts. Would I still be better off after paying the 15 per cent tax in there than earnings from a bank term deposit?
It doesn’t matter whether the fund is in accumulation mode, or pension mode, or what type of superannuation fund it is – if your total superannuation balance exceeds $1.9 million, you cannot make any further non-concessional contributions. If you do the sums, I think you will find that you can keep a hefty chunk of money in your own name and pay no tax thanks to a wide range of offsets. Don’t forget the tax rates change after June 30.
I am 83, retired, and single. I have been living on a part age pension, which has just been reduced in the March handouts. I currently have just over $600,000 in super and own my home. Should I move my superannuation to pension mode or just take out lump sum withdrawals as I need them? I am in a quandary as to what to do and can’t find any information on the benefits of one over the other.
There is no reason why you should be keeping money in the accumulation phase, where your funds are paying tax at 15 per cent from the first dollar earned. Instead, you should move it to the tax-free pension mode.
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