Nelson, aged 58, has just retired. He has superannuation totalling $300,000, of which $60,000 is tax free and the balance is paid from taxed funds. Nelson is planning to roll all of his superannuation to an allocated pension and draw 4% as a minimum annual pension payment. Nelson receives $80,400 in other taxable income for the year. 

Calculate the tax payable, relative to the receipt of his pension payments. 

If Nelson completes a cash out and re-contribution strategy for $100,000, calculate the tax payable relative to:

i. The cash out, and 

ii. On receipt of his pension payments?

Should Nelson complete the cash out & re-contribute strategy for $100,000, Explain why or why not?

Answer rating: 100% (QA)

1 Tax payable on pension payments without cash out and recontribution Nelsons superannuation balance is 300000 of which 60000 is taxfree Therefore the ... View the full answer