Superannuation Contribution rules and limits are set to change on the 1st of July 2017 and with those changes there are still opportunities that you could take advantage of before the financial year ends.
Summary of the Super Cap changes:
|Contribution||Age||Current Cap||Cap from 1st July 2017|
|Before Tax||Under 50 Years||$30,000 per annum||$25,000 per annum|
|Before Tax||50 years & Over||$35,000 per annum||$25,000 per annum|
|After Tax||Under 65 Years||$180,000 per annum|
Up to $540,000 under the bring forward rule
|$100,000 per annum|
Up to $300,000 under the bring forward rule
|After Tax||65 Years or Over||$180,000 per annum||$100,000 per annum|
Before tax (concessional) super contribution opportunities
There is an opportunity to contribute an additional $5,000 for those aged over 50 and $10,000 for those aged 50 or over in pre tax super contributions than what will be possible once the cap is reduced on 1st July 2017.
After tax (non concessional) super contributions opportunities
There is an opportunity to contribute $80,000 more in after tax super contributions prior to 30th June 2017 than what will be possible when the cap changes on 1st July 2017. Further if you are under 65, you could also bring forward 3 years worth of after tax contributions to a maximum of $540,000 i.e. an additional $240,000.
Another thing to note is that individuals with balances in excess of $1.6m or above, will not from 1st July 2017, be able to make any further after tax contributions. The year ended 30th June 2017 may be the last opportunity to make an after tax contribution.
Other things to be aware of
The amount of super you can move into pension phase after 1st July 2017 will be restricted to a maximum of $1.6m (excluding subsequent earnings). If there is already be pension balance above the sum of $1.6m, the excess must be placed back into the accumulation phase or taken out of super completely prior to 1st July 2017 to avoid potential penalties.
Transition to retirement income stream pensions will, after 1st July 2017, lose their tax free investment earnings status with such earnings to be subject to the maximum 15% tax rate.
From 1st July 2017, the government will increase the opportunity of contributing to their spouse’s super account by raising the lower income threshold for the receiving spouse from $10,800 to $37,000. This may benefit those wishing to make spouse contributions & receive the maximum tax offset of $540.
The government is projecting that Australians will live longer in the future and thus most will need to fund longer retirement periods. More super savings will be required to fund the longer retirement period which in turn provides an appropriate lifestyle in the years after you finish working.
We at The Garis Group are here to assist you with any queries regarding the changes to superannuation and how they may impact you. Call us on 0249694699 to make an appointment.