There are only a few types of people I genuinely can’t wrap my head around.
People who scroll through social media for longer than 30 seconds per day.
People who take drugs as an alternative to diet and exercise.
And people who voluntarily maximise their tax liability.
If you’re over 60 and still paying full income or superannuation tax, I’ve got bad news: you’re not being clever or humble — you’re being fleeced.
The Tax Donation You Didn’t Know You Were Making
Let’s break it down.
If you’re over 60, earning solid income, and not using a TTR strategy, you’re voluntarily giving up:
- Income tax savings (by not salary sacrificing into super),
- Superannuation tax savings (by having your super in accumulation phase),
- Access to tax-free super income, and
- Tax arbitrage opportunities that could save you five figures per year.
The government loves people like you.
They should send you a thank-you card. Maybe even a fruit basket.
Here’s how it actually works when done properly:
- You salary sacrifice part of your salary into super at just 15% tax (unless you’re already at the cap and/or copping Division 293, but we’ll get to that in a sec).
- Commute super from accumulation phase to pension phase.
- You draw tax-free income from your TTR pension to keep your cashflow the same.
- Your net wealth still grows while your tax liability plummets.
🔍 Side Note: What’s Division 293?
If your adjusted taxable income is over $250,000, Division 293 applies an extra 15% tax on top of the usual 15% super contributions tax — bringing your total to 30%.
But here’s the kicker: 30% is still often better than 47% personal tax.
So yes — even if you’re hit with Div 293, the TTR strategy still makes sense. And if you’re not hit with Div 293, it’s even more of a no-brainer.
Clients of The Virtuous Collective
If you’re a client of The Virtuous Collective on our standard service agreement — you’re entitled to this advice.
No extra fees. No upsell. It’s included. We’ll crunch the numbers, review the caps, assess the thresholds, and put the strategy in place so you can stop accidentally funding Canberra’s burgeoning deficit.
What If You’ve Already Retired?
If you’ve stopped working and you’re over 60 — congrats. You’ve unlocked another level: pension phase.
Here’s why it matters:
- Earnings inside your super fund become tax-free. No 15% tax on capital gains, dividends, interest. It’s a complete shelter.
- Your pension payments to yourself are also tax-free.
- This is called moving from accumulation phase to pension phase. There’s a cap, though — which brings us to…
🧢 What’s the Transfer Balance Cap?
The Transfer Balance Cap ($1.9 million, increasing to $2m on 1 July 2025) is the maximum you can shift into pension phase where earnings are tax-free.
Anything above that stays in accumulation, still taxed at 15% (or 10% on capital gains after 12 months).
That’s why strategy matters:
We help you fill the cap efficiently and keep the excess growing smartly — and legally — elsewhere (e.g., family trust, company structure, or spouse’s super).
Remember, anything below the transfer cap i.e. the first $2m, is tax-free. This a monumental amount of tax savings!
💡 Super Re-Contribution Strategy: Not Needing All the Money Right Now? Here’s a Smart Play
Here’s the deal you make with the devil: When you transfer to pension phase there are minimum drawdown requirements that start at 4% per financial year at age 60 and slowly increase as you get older. So what if you don’t need all this money and want it to keep working for you?
Withdraw money tax-free from pension phase
➡️ Re-contribute it as a non-concessional contribution back into super
➡️ Reduce the “taxable component” of your super
➡️ Result? Money stays invested, tax-free earnings and less death tax for your loved ones (potentially saving them 17% on hundreds of thousands or millions of dollars).
It’s a classic win-now and win-later strategy. And yes — we do that too, as part of your existing service agreement.
⚠️ Division 296: A really crappy tax… but still better than any other holding structure
From 1 July 2025, a new tax bomb hits: Division 296.
If your total super balance exceeds $3 million, the government wants a 15% tax on unrealised gains above that limit.
Let me repeat that:
They want to tax you on profits you haven’t even made yet.
Here’s the good news:
- The first $3 million is unaffected… I don’t care how rich you think you are, $3 million is a LOT of money!
- The $3 million threshold is per person, so with couples, you can often manage things by planning together.
- Smart re-contributions, withdrawals, and trust/company structuring now can reduce exposure later.
- Most importantly, staying in accumulation phase unnecessarily leaves you paying 15% now and maybe 30% later if Div 296 hits you.
The bottom line: Get it in pension phase. Get it under the caps. Get the tax rate to zero.
Summary: Do Less. Keep More. Start Now.
Here’s the wrap:
- Still working over 60? Do a TTR strategy — salary sacrifice in, tax-free pension out.
- Stopped working over 60? Move to pension phase and enjoy zero tax on super fund earnings.
- Don’t need the money? Use a super re-contribution strategy to reduce the taxable portion for estate planning.
- High-income earner? Div 293 still beats marginal rates.
- High super balance? Div 296 sucks but still beats marginal rates.
If you’ve built up a healthy super balanced, you’ve done the hard part.
Now do the smart part — and stop giving our bloated federal budget your hard-earned dollars!