Smart EOFY strategies For 30 June 2013

1. Smart EOFY strategiesFor 30 June 2013 Maximise your superannuation

2. Disclaimer This information has been prepared by MLC Limited (ABN 90 000 000 402) 105-153 Miller Street, North Sydney NSW 2060, a member of the National Australia Bank group of companies. This information was produced as an information service and without assuming a duty of care. This information is for adviser use only. It contains general information only. It does not constitute financial advice and should not be relied upon as a substitute for financial or professional advice. In preparing this information, MLC Limited did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, a person needs to consider (with or without the advice or assistance of an adviser) whether this information is appropriate to their needs, objectives and circumstances. The information in this presentation is based on our interpretation of relevant laws as at 1 April 2013 and is subject to change. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. • MLC is not a registered tax agent. If you wish to rely on this information to determine your personal tax obligations you should seek advice from a Registered Tax Agent. Maximise your superannuation

3. Maximise your superannuation

4. Agenda • Why invest via super? • Super strategies • Insurance • Other tax-effective year-end opportunities • How I can help Maximise your superannuation

5. Why invest via super Tax concessions every step of the way • 1. When you contribute to super • Make contributions from pre-tax salary • Claim contributions as a tax deduction • Get a Government co-contribution of up to $500 • Get a tax offset of up to $540 Now Retirement 1 Includes a Medicare levy of 1.5%. Maximise your superannuation

6. Why invest via super Tax concessions every step of the way • 1. When you contribute to super • Make contributions from pre-tax salary • Claim contributions as a tax deduction • Get a Government co-contribution of up to $500 • Get a tax offset of up to $540 Now Retirement • 2. While build up super • Earnings in fund taxed at max. of 15% • Earnings from investments in own name taxed at up to 46.5%1 1 Includes a Medicare levy of 1.5%. Maximise your superannuation

7. Why invest via super Tax concessions every step of the way • 1. When you contribute to super • Make contributions from pre-tax salary • Claim contributions as a tax deduction • Get a Government co-contribution of up to $500 • Get a tax offset of up to $540 Now Retirement • 2. While build up super • Earnings in fund taxed at max. of 15% • Earnings from investments in own name taxed at up to 46.5%1 • 3. When use super to pay pension • No tax on investment earnings • Tax offset between 55 and 59 • Tax-free income at 60+ 1 Includes a Medicare levy of 1.5%. Maximise your superannuation

8. Super EOFY strategies • Get more from your salary or bonus • For employees • Called salary sacrifice • Contribute pre-tax salary or bonus into super • Contribution taxed at max. 15%, not marginal rate up to 46.5%1 • Grow retirement savings • Reduce tax payable on salary or bonus by up to 31.5% • You can only sacrifice prospective salary or a bonus into super (ie income to which you are not already entitled) and need to make an effective salary sacrifice agreement with your employer 1 Includes a Medicare levy of 1.5%. Maximise your superannuation

9. Salary sacrifice case study William is aged 45 About to receive a $5,000 pa salary increase Will bring his total salary to $100,000 pa Considering salary sacrificing this additional $5,000 into super Maximise your superannuation

10. Salary sacrifice case study 1 Includes a Medicare levy of 1.5%. Maximise your superannuation

11. Results (after 20 years) $189,371 $200,000 + $69,886 $160,000 $119,485 $120,000 $80,000 $40,000 $0 Receive pay rise as after-tax salary and invest outside super Salary sacrifice pay rise into super Assumptions:. A 20 year comparison based on $5,000 pa of pre-tax salary. Both the super and non-super investments earn a total pre-tax return of 7.7% pa (split 3.3% income and 4.4% growth). Investment income is franked at 30%. All values are after income tax (at 15% in super and 38.5% outside super) and CGT (including discounting). Note: No lump sum tax is payable on the super investment as William will be 65 at the end of the investment period. Maximise your superannuation

12. Super EOFY strategies • Make tax deductible super contributions • For people who are self-employed or not employed • Make personal super contributions • Claim some (or all) of contribution as tax deduction • Grow retirement savings • Use deduction to reduce taxable income and income tax payable To be able to claim a portion of your personal super contributions as a tax deduction, you need to complete a valid ‘notice of intent’ form and give it to your super fund within specific timeframes. If you don’t you may not be able to claim a deduction. (You also need to be eligible to make a contribution). Maximise your superannuation

13. Consider contribution caps Salary sacrifice and personal deductible contributions count, along with other amounts, to ‘concessional’ contribution (CC) cap The cap is $25,000 in 2012-13 The caps are annual amount and you can’t carry forward any unused amount to another financial year It’s really important you make the most of the cap each year, particularly if you are approaching retirement Opportunity to make larger ‘last minute’ concessionally taxed contributions no longer available Maximise your superannuation

14. Cap implications • Penalty tax of 31.5% payable are applicable on excess contributions for the 2012-13 financial year • Review this year’s contributions and remember that a range of other items count towards this cap, including: • super guarantee conts, including those from more than one employer • concessional conts made to fund insurance in super • Review contributions from 1 July, particularly if you are an employee as the superannuation guarantee rate will increase from 9% to 9.25% Maximise your superannuation

15. Super EOFY strategies • Get a super top up from the Government • For people who earn: • at least 10% of income from employment or self-employment • a total income of $46,920 or less • Make personal after-tax contribution • Get up to $500 in free super from Government • Spouse may qualify for co-cont if you earn too much Maximise your superannuation

16. Co-contribution case study Ryan is aged 40 Employed on salary of $37,000 pa Wants to invest $1,000 in after tax salary each year until he retires at 60 Maximise your superannuation

17. Co-contribution case study Maximise your superannuation

18. Results (after 20 years) $100,000 $80,000 $58,810 $60,000 + $18,469 $40,341 $40,000 $20,000 $0 $1,000 pa invested outside super(no co-contribution) $1,000 pa investedinside super(includes co-contribution) Assumptions:. A 20 year comparison based on an after-tax investment of $1,000 pa. Both the super and non-super investments earn a total pre-tax return of 7.7% pa (split 3.3% income and 4.4% growth). Investment income is franked at 30%. All values are after income tax (at 15% in super and 34% outside super) and CGT (including discounting). Note: No lump sum tax is payable on the super investment as Ryan will be 60 at the end of the investment period. Maximise your superannuation

19. Super EOFY strategies • Boost partner’s super and reduce your tax • For people who have a spouse who earns less than $13,800 pa • Make after-tax super contribution on their behalf • Get tax offset of up to $540 • Grow spouse’s super and reduce your tax Maximise your superannuation

20. Other super EOFY strategies Make insurance more affordable • Buy life and total and permanent disability insurance in super Self-employed Claim super contributions as tax deduction Employee Buy insurance in super with pre-tax dollars Eligible for co-contribution Use co-contribution to help pay for future insurance • Concessions can: • make it cheaper to insure through super, or • enable you to purchase a higher level of cover Maximise your superannuation

21. Other smart EOFY opportunities Prepay expenses • If want to bring forward tax deductions and pay less tax this financial year, you could: • pre-pay annual premiums for an income protection policy held in your own name • pre-pay up to 12 months interest on an investment loan (usually only available with fixed rate facilities) Maximise your superannuation

22. Other super EOFY strategies • Pay less tax on investment earnings • Cash out non-super investment • Make personal super contribution • Earnings in super fund taxed at max. rate of 15% (proposed to increase to 30% for people earning over $300k pa.) • Earnings from investment in own name taxed at up to 46.5%1 • Reduce tax on investment earnings by up to 31.5% • Consider capital gains tax payable when selling asset 1 Includes a Medicare levy of 1.5%. Maximise your superannuation

23. Other smart EOFY opportunities Manage CGT • If make capital gain on asset sale this financial year, consider: • triggering a capital loss by selling another investment, or • making a super contribution and claiming amount as tax deduction (if eligible) • Both strategies could be used to offset capital gain and save tax Maximise your superannuation

24. Strategy wrap-up 30 June 2013 • Key issues to consider • Review concessional contributions • Review TTR strategy • Make the most of your tax refund • Super strategies • Salary sacrifice contributions • Personal deductible contributions • Co-contribution • Spouse contribution • Insurance strategies • Buy insurance in super • Pre-pay expenses Start planning for EOFY 2013/14 now • Other smart opportunities • Invest non-super money in super • Manage CGT Maximise your superannuation

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26. Questions Maximise your superannuation