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For most Australians, the rules and tax rates applied to their superannuation funds are the same.
But if you are in WA and started working in the government sector before April 2007, you may have a GESB West State superfund. If that's the case, congratulations! This fund has significant benefits that are not available to the rest of Australia. Read on to discover how to unlock the full potential of your GESB benefits.
Unique benefits of a GESB West State superfund
Salary sacrifice beyond the standard cap on tax-deductible contributions 
While most people are limited in the amount they can contribute to their superannuation fund, individuals who hold a GESB fund have the unique benefit of being able to contribute more than the standard annual concessional (tax-deductible) contributions of $27,500 for the 2023/2024 financial year. This cap is widely used to enhance Australians' superannuation in a tax-effective manner.
GESB West State members who continue to work in the government sector can choose to sacrifice their entire salary, even if it goes beyond the standard $27,500 cap. However, there is a lifetime untaxed plan cap of $1.705 million for the 2023/2024 financial year that GESB West State members must be careful not to exceed.
Salary sacrifice to reduce capital gains tax liability
You might wonder why someone would want to salary sacrifice almost all of their income. Well, one scenario where this strategy can be useful is when a West State member wants to reduce a large upcoming capital gain. In this case, we can plan for the West State member to start salary sacrificing a majority of their salary at the beginning of the financial year and instead, rely on alternative avenues to meet their living expenses. This can significantly reduce their capital gains tax liability while also boosting their superannuation.
Retire comfortably with a Transition-to-Retirement pension
If you don't want to reduce your take-home income but still want to increase your superannuation savings as you approach retirement, you have other options. One scenario we help our clients with is using a transition to retirement pension (or TTR for short) to make up for the income loss, essentially keeping the same amount of net income while lowering their taxable income.
The benefits of an untaxed scheme 
West State has another distinctive advantage, which is its "untaxed scheme." A normal Australian superannuation fund follows a 15% tax on tax-deductible contributions and earnings the fund generates. But GESB West State members have the benefit of an untaxed scheme. This doesn't mean that the members pay no tax, but rather it's a delayed tax system. In other words, when a member chooses to rollover or withdraw their funds from GESB, a tax would then apply. By paying the tax only when leaving the fund, more funds can compound, potentially leading to a higher retirement balance over the long term.
Estate planning benefits with GESB
Furthermore, the untaxed scheme with GESB West State could also have some advantages for estate planning. In the instance where a GESB member died with the benefits going to a spouse or financial dependent, it would result in the beneficiary receiving the full proceeds. The beneficiary would thereby bypass needing to pay the 15% tax that the member would have paid if they rolled over or withdrew the benefits whilst alive.
The above-mentioned points are just a few of the benefits that a West State fund holds. As you can see, to fully utilize these unique benefits, some level of pre-planning is required. It is important to note that everyone's circumstances are different, and this article doesn't take into account your personal situation. Therefore, it is important that you consider the above points in the context of your financial situation, needs, and objectives. Seeking financial advice before implementing a strategy is highly recommended.
FOR MORE INFORMATION
If you would like to learn more about the topics discussed in this article, please contact your local RSM financial adviser.
Note: past performance is not an indicator of future results.
This article has been prepared by RSM Financial Services Australia Pty Ltd ABN 22 009 176 354, AFS Licence No. 238282.
As everyone's circumstances are different and this article doesn't take into account your personal situation, it is important that you consider the above in light of your financial situation, needs and objectives, and seek financial advice before implementing a strategy.
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