Select Page

Superannuation Changes – Are You Ready?

by | Feb 27, 2017 | Uncategorised | 0 comments

“Are you ready for the Government’s superannuation changes?”

 After announcing superannuation laws as part of the 2016 Federal Budget, in late 2016 the Federal Government introduced changes to these laws – most of which will come into effect as of July 1, 2017.

This makes it an excellent time to start thinking about your own super or even your self-managed superannuation fund (SMSF), and how it may be affected.

 

SUPER RECAP:

For those of you who may just be getting started in the work force (and consequently, are just getting started with superannuation), need a quick recap, have a SMSF, or need a refresher on the benefits of looking after your superannuation, here’s the ‘need-to-know’.

In short, superannuation is a way to save money for your retirement, savings which are made up of both employer contributions, and your own money.

In a SMSF, the main difference is that the individual members (between one and four) are also the trustees, and are responsible for making decisions for the fund, and making sure it complies with all legislations.

Superannuation is important as it forms the basis of support for your retirement, and incentivises the building of wealth to ensure a stress-free life after your working days are over.

 

SO WHAT’S CHANGING?

Legislative changes that may affect you and your fund are:

  • A new $1.6 million transfer balance cap – will put a limit on the amount an individual can hold in the tax-free retirement phase from 1 July 2017
  • Lower contribution caps for all taxpayers – New caps will be $25,000 per year for concessional contributions (pre-tax contributions), and $100,000 per year for non-concessional contributions (after tax contributions)
  • Reduced income threshold for higher contributions – The threshold at which individuals must pay an extra 15 per cent contribution tax has been lowered from $300,000 to $250,000
  • Greater flexibility – Workers with broken work patterns and a super balance of less than $500,000 can carry forward their unused concessional cap space for up to five years
  • Removal of tax-free treatment – This will occur on all assets that support a transition to retirement income stream.

 

WHO WILL BE AFFECTED?

Those who will most likely be impacted by the Government’s superannuation changes are:

  • Those with a super balance of around $1.6 million,
  • Anyone planning on making significant personal contributions to their super fund in the next few years,
  • High income earners
  • Those with a transition to retirement pension currently in place.

If you find yourself in one of these groups moving forward, you may need to adjust your contributions, or rework your pension, investment and estate strategies.

 

NEED MORE INFO?

If you have any questions, or require any further information on these superannuation changes, and how, if at all, they will affect your retirement fund, talk to the team at Catalyst Accountants today.