by Duc Hong

The changes introduced from 1 July 2017 meant that assets supporting a TRIS are no longer exempt from tax. While that was a significant change, there are still circumstances where the TRIS strategy can be effective.  

Elements to consider when implementing a Transition to Retirement strategy include:

• Members must have reached preservation age
• For those under 60 the TRIS may result in additional taxable income, however a 15% tax offset will generally be available
• For those over 60 the TRIS income is tax-free
• The maximum TRIS payments each year are limited to 10% of the account balance.

The strategies that can be used with a TRIS include:

• Maximising super contributions in a tax effective way whilst not reducing net income received. Contributions can be salary sacrifice or personal concessional
• Trustees may allow unused carried forward concessional contribution caps to be fully utilised
• Mini withdrawal / re-contribution strategy to increase tax free components;
• Benefit splitting, including with a younger spouse where their account balance may be able to be quarantined for Centrelink purposes
• Supplementing lost income where a taxpayer reduces their working hours from full-time to part-time
• Utilising super to pay down debt.

As at October 2020, anyone born on or before October 1962 would be eligible to commence a Transition to Retirement Income Stream.