With so many legislated changes to Super coming into effect on 1 July 2017, it can be difficult to know which affect you and what you need to do. There may be actions you must take before June 30 to avoid penalties, and now is also a good time to review your Super strategy to make the most of your retirement savings.
Click below to view our full Super Reforms checklist which helps you understand the changes and how they may affect you.
Alternatively, read on below for issues of interest to your specific needs.
1. Do you have salary sacrifice arrangements in place?
You only have a few months to contribute up to $30,000 in pre-tax contributions (or $35,000 if you are over 50). The Cap for pre-tax or Concessional Contributions will reduce to $25,000 for everyone from 1 July, 2017. Concessional Contributions include employer Super Guarantee Contributions as well as pre-tax personal deductible contributions. Find out what you need to do.
2. Do you earn more than $250,000 per annum including super?
Concessional contributions into Super are taxed at 15%, however higher income earners are liable to pay 30% tax on Concessional Contributions. From 1 July, 2017 the income threshold for paying the 30% tax (Division 293 tax) will reduce from $300,000 to $250,000. Find out what you need to do.
3. Are you making after-tax contributions to Super?
Your ability to make large after-tax contributions to super will be significantly reduced from $180,000 per annum to $100,000 per annum from 1 July, 2017. You have a few short months to take advantage of the bring-forward rule that allows you to contribute up to $540,000 this financial year. Find out what you need to do.
4. Are you holding more than $1.6 Million in Super?
A new $1.6 Million Balance Transfer Cap will be introduced on 1 July, 2017. If your Super balance has reached this amount, you will no longer be able to make non-concessional contributions. Further, if you are retired and have more than $1.6 Million in retirement phase income streams, you will need to reduce the total value of your retirement phase income stream to below $1.6 Million. Find out what you need to do.
5. Are you considering a Transition to Retirement Strategy?
Your assets which support a Transition to Retirement income stream will no longer be tax free inside your super fund from 1 July, 2017. These assets will be taxed at 15% per annum from 1 July, 2017. This will affect new and existing Transition to Retirement pensions. Find out what you need to do.
6. Are you contributing Super to your Spouse’s Super?
Currently a tax offset is available for a person contributing to a spouse’s Super fund, where the spouse’s income is less than $10,800 per annum. From 1 July, 2017, the spouse’s income threshold increases to $37,000 for the tax offset to apply. Find out what you need to do.
We encourage you to seek professional financial advice to understand how the complexity of reforms may impact on your personal situation and to review appropriate options and strategies aligned to your financial goals.
If you would like advice on how the changes may affect your Superannuation and retirement planning, I encourage you to contact our office on 07 3720 1299 or email admin@wealthfundamentals.com.au so we can help you to make the most of your Super.
Lane Moses Pty Ltd ABN 56 092 186 117 trading as Wealth Fundamentals and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. Wealth Fundamentals strongly suggests that you should not act on it without first obtaining professional advice specific to your circumstances. This information is based upon our understanding of legislation at the time of writing. Such legislation may be subject to change.
This publication cannot be reproduced in any form without the express written consent of the author.