Are you ready for the Government’s superannuation changes?

FILED UNDER: CANBERRA ACCOUNTANT, TUMUT ACCOUNTANT, WAGGA ACCOUNTANT, SUPERANNUATION, SMSF




Are you ready for the Government’s superannuation changes?

On Wednesday 9 November 2016 the Government introduced its superannuation legislation which makes changes to the superannuation laws it originally announced in the 2016 Federal Budget.

Most of these changes will apply from 1 July 2017 so it may be worthwhile thinking about how your superannuation will be impacted by the changes now and whether you might need to change any of your superannuation arrangements.

 

Changes in the legislation which you might need to consider include:

  • The new $1.6 million transfer balance cap, which places a limit on the amount an individual can hold in the tax-free retirement phase from 1 July 2017. Please note this is a per individual cap and only applies when in an account based pension.  Anything above the $1.6 million cap can remain in the superannuation environment but earnings will be taxed at 15%.
  • The lower contribution caps for all taxpayers applying from 1 July 2017. The new caps will be
    • Concessional contributions (pre-tax contributions) — $25,000 per year.
    • Non-concessional contributions (after-tax contributions) — $100,000 per year. Note that if your superannuation balance is over $1.6 million then from 1 July 2017 you are no longer able to make non-concessional contributions.
  • Reducing the income threshold at which individuals are required to pay an additional 15 per cent contributions tax, from $300,000 per year to $250,000.
  • Removing the tax-free treatment of assets that support a transition to retirement income stream.
  • Providing greater flexibility for those with broken work patterns by allowing individuals with balances of less than $500,000 to ‘carry forward’ unused concessional cap space for up to five years. Please note that this measure does not commence until 1 July 2018.

Some of these changes may require you to adjust your investment, contribution, pension and estate planning strategies going forward. 

This will most likely be the case if you have a consolidated superannuation balance of over or close to $1.6 million, were planning on making significant contributions to superannuation in the next few years, are a high income earner or have a transition to retirement pension in place now.

 

How can we help?

If you are concerned that the Government’s changes to superannuation are going to affect you, get in contact with Amy Glanvill, Easdowns superannuation expert and arrange a time to meet in order to discuss your particular requirements in more detail.


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