Super changes from July 2017
New laws will govern what we can and can’t do in super how will You be impacted?
New contribution caps for all
New caps have been placed on the amounts you are able to contribute effective July 2017.
After- tax contributions (also known as non-concessional contributions) will be capped at $100,000 per year (up to $300,000 if you bring -forward the next two years and are under the age of 65).
If you’re planning to benefit from super’s tax concessions by depositing money from an inheritance or the sale of an asset, you may need to consider these contribution limits.
When it comes to before-tax (concessional) contributions, there are also new caps. There is no longer a separate cap for those aged 50 and over.
The new limit of $25,000 pre-tax/before tax contributions will apply to everyone.
If you have been making salary sacrifice payments you may need to reassess the amount to compensate for the legislated reduction, ensuring your total concessional contribution for the financial year does not exceed $25,000, including employer compulsory contributions.
More super tax for more high earners
From July 1, 2017, the salary band attracting 30% tax on super contributions was lowered for those earning above $300,000 to capture people earning $250,000 and above. Anyone earning below $250,000 will still pay 15% tax on all contributions.
Changes to transition to retirement rules
If you an older Australian you may feel penalised by the removal of the tax exemption on earnings in a transition-to-retirement (TTR) pension as one of the appealing aspects of the TTR strategy lay in the pension account’s tax-free earnings entitlement.
If you’re using a TTR to boost your super while salary sacrificing some of your income, the removal of earnings’ tax exemptions is likely to reduce the overall amount you end up accumulating in retirement unless you take other steps to grow your money.
A good time to follow up
Be sure to speak to one of our financial planners so we can assist you with a plan to make the most of your money.
Darwin Financial Services Pty Ltd, ABN 85 009 632 651, is an Authorised Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee.
Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person.