The ‘Fair and Sustainable Superannuation Bill 2016’ was officially passed through Parliament and it is generally accepted to be a mere formality to receive Royal Assent and becoming law in time for 1 July 2017. The lead up to this date provides some opportunities for our clients looking to make the most of the current laws before the updated system comes into effect.
As a brief refresher, some of the key measures include:
Introducing a $1.6 million transfer balance cap per individual which limits the amount that can be transferred to the retirement phase, where earnings are tax-free.
Reducing the concessional contributions cap to $25,000 for all taxpayers.
Reducing the non-concessional contribution cap to $100,000 pa (or $300,000 under the bring forward provisions).
Removing tax exempt earnings for transition to retirement income streams.
We’ll focus now on the changes that have an impact on this financial year. The current contribution rules still apply, so depending on how much you have contributed to your Superannuation in the past, you could potentially contribute up to $540,000 this financial year to take advantage of the concessionally taxed environment.
Of course, not always do you have a spare $540,000 in their account available to just pop into their Superannuation accounts, but if you have a Self-Managed Super Fund (SMSF) or a Super Wrap account, you might be able to make in-specie asset contributions to transfer them from your own name. Assets most commonly transferred are shares or managed funds, but or SMSFs, other assets such as commercial properties could also be considered.
A lot of press has centred around the $1.6m limitation to Super pension accounts from 1 July 2017. We should remind you that this limit is per person, so this will only be of concern if your own balance is above $1.6m. If you are fortunate enough to be in this position, the new rules state that the excess over $1.6m will need to be in an ‘accumulation’ account that will be subject to the standard 15% tax rate.
For our clients currently salary sacrificing surplus cashflow into their Super, it may be worth making additional contributions before 1 July 2017. The current caps are $30,000 for those under 50 and $35,000 for those over 50 and these will both drop to $25,000 from 1 July 2017.
The superannuation landscape will continue to evolve over the coming years making it even more important to continue to be diligent and monitor your retirement savings. We pride ourselves on being experts in researching opportunities and recommending investments and implementing strategies that fit in with our client’s objectives and retirement plans.
For an obligation free conversation about your financial future, please contact us on 03 9603 0072 or at firstname.lastname@example.org
Director and Wealth Advisor
Endorphin Wealth Management
Phillip Richards is a qualified Financial Advisor with more than nine years’ experience in the industry. His expertise in investment, superannuation, SMSF, retirement planning and insurance will help you assess your options to build your wealth. Contact Phillip today to discuss how you can build your own wealth and plan to reach your goals.
This information is general in nature and does not take your personal situation into account. If you are interested in taking control of your wealth, contact Endorphin Wealth Management.