As a Medical Professional, you’re accustomed to making informed decisions that affect the well-being of your patients. Similarly, when it comes to financial health, understanding the intricacies of your superannuation is crucial. The Super SA Triple S fund, designed exclusively for employees in the South Australian public sector, presents a unique opportunity for wealth accumulation with its distinct tax treatment and contribution flexibility. However, it also comes with complexities that require careful navigation to avoid potential pitfalls.
The Technical Edge: Zero Internal Taxation & Zero Contributions Tax
One of the standout features of the Triple S fund is that it does not have internal tax, including on income distributions and capital gains. This means your investments compound and grow without the annual tax payable by typical public offer funds, allowing for a more rapid increase in your super balance. However, it’s essential to understand that this tax advantage is not eliminated but deferred. Upon withdrawal, a 15% exit tax, or more specifically an untaxed element rollover tax, is applied, and if the funds are directly withdrawn to your bank account, an additional 2% Medicare levy may apply.
Unlike a public offer fund, superannuation guarantee (SG) and salary sacrifice contributions to Triple S do not incur the 15% contributions tax. Again, more of your money compounding without tax drag.
The Untaxed Plan Cap: A Double-Edged Sword
The Triple S fund’s untaxed plan cap is a critical threshold to be mindful of. Balances exceeding this cap are taxed at a steep rate of 47%. While the fund’s lack of a traditional concessional contributions cap allows for significant tax-deductible contributions, over-contributing can lead to breaching the untaxed plan cap, resulting in substantial tax implications.
Strategic Contributions: Maximising Benefits Without Exceeding Limits
For medical professionals, particularly those with earnings comfortably above $250,000, the risk of incurring an additional 15% Division 293 tax on contributions is a reality. Mismanagement of the untaxed plan cap, coupled with Division 293 tax, could lead to an effective tax rate of approximately 62%, far exceeding the highest marginal tax rate. Strategic financial advice is paramount to avoid such outcomes and to optimise contributions without surpassing the untaxed plan cap.
Recent Changes and Case Studies: Adapting to New Rules
November 2022 brought about significant updates to the Triple S fund, including increased flexibility and the option to roll out funds partially in favour of a taxed fund. These changes open up new strategies for managing your super, which can be particularly beneficial for medical professionals engaged in the public sector or with exposures to both the public and private sectors. Recent medical specialists we have advised have shown that with precise planning and expert advice, tax savings can amount to substantial figures (for some, in the multiple hundreds-of-thousands of dollars), profoundly impacting your retirement balance.
Next Steps
At Bartons, we specialise in advising medical professionals, understanding the unique opportunities and challenges presented by the Super SA Triple S fund. With over 50 years of experience and a deep specialisation in a) advising medical professionals and b) knowledge of untaxed superannuation funds, we are equipped to provide personalised advice that comprehends not only your current financial situation but also your long-term career and retirement plans. Our detailed modelling ensures that any strategy we recommend is meticulously tailored to your individual circumstances and goals.
Understanding the Super SA Triple S fund’s benefits and complexities is just the beginning. To fully capitalise on the opportunities it presents and to navigate its pitfalls, partner with the pre-eminent medical specialist financial advisory firm who can offer the specialised guidance you need. We invite you to book an appointment with Bartons to discuss your circumstances and to craft a financial strategy that positions you for a stronger and happier retirement.
This general advice has been prepared without taking account of your objectives, financial situation or needs. You should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product disclosure Statement before deciding to acquire the product.