3. A Brief Summary of The Benefits of Superannuation 

What are the tax benefits?

The savings able to be achieved depend on the member’s age and the member’s marginal tax rate.  The situation is summarized in the following table:

These rates compare favorably with the personal tax rates and are particularly good for unrealized capital gains: capital gains are only taxed when and if the underlying asset is sold, ie on realization. This means buy and hold strategies are very tax efficient for SMSFs. If you hold long enough, ie until a pension starts, there will be no tax at all.

What about locking up my money?

Doctors are sometimes concerned that super based strategies mean their money is locked up and unable to be accessed, or at least easily accessed. This is true. Superannuation benefits are generally locked up, or preserved, until normally at least age 55. But we believe this is most unlikely to be a problem for doctors and dentists. This is because:

1. they have strong cash flow from their practices;
2. they have significant borrowing ability, with or without security;
3. they usually have sufficient life insurance and income insurance to cover adverse health events (with death as the ultimate adverse health event);
4. super benefits can be paid at age 55 or earlier on death or serious illness.