The time is now! Embrace the changes and benefit before it’s too late
Recent super reforms, particularly the changes to non-concessional contributions (NCC’s), present a timely opportunity for you to capitalise on current superannuation laws before 30 June 2017.
The changes
From 1 July 2017 several key changes will come into play including but not limited to the following:
the NCC cap will be lowered from $180,000 to $100,000.
the bring forward amount will be reduced from $540,000 to $300,000.
individuals whose total super balance is above $1.6 million will no longer be eligible to make NCC’s. This may be particularly relevant for those who have a transition to retirement (TTR) arrangement.
the concessional contributions (before tax) cap will decrease to $25,000 per year for everyone.
the high income threshold will be lowered from $300,000 to $250,000. Anyone earning $250,000 or more will pay 30% tax on their contributions.
The opportunities
Depending on your personal circumstances, you may be able to reap the maximum benefits available to you right now by making some adjustments to your financial plan. Here are a few effective strategies that that may or may not apply to you:
If you are turning 50 and over: you could contribute an extra $10,000 (before-tax) this financial year, before the cap is reduced to $25,000 from 1 July 2017.
If you are turning 49 or under: you could contribute an extra $5,000 (before-tax) this financial year, before the cap is reduced to $25,000 from 1 July 2017.
If you are under age 65: you could bring forward three years’ worth of after-tax super contributions up to a maximum of $540,000. This is significantly higher than the $300,000 limit that will apply from 1 July 2017.
Do you have a term deposit that you want to cash in? Have you made some money from the recent sale of your house or investment property? Maybe you’ve received an inheritance from a family member? It’s worth considering contributing these proceeds into your superannuation account before the 30 June deadline to make the most of the NCC caps.
If you are earning between $250,000 and $300,000 pa (inclusive of super contributions): you could seek to make the most of your concessional contributions this financial year (up to $30,000 or $35,000 depending on your age, without paying the additional 15% tax that will be imposed from 1 July 2017).
The benefits
What are the benefits of getting in early?
Greater accumulated superannuation balance to enjoy in retirement tax free.
One off opportunity to restructure existing assets to take advantage of the upcoming changes in legislation.
Boost your knowledge and understanding around superannuation.
We’ve covered some of the main points here but there are other changes that may also affect you. It’s likely you’ll have questions about the best course of action in the lead up to the changes and after they take effect. Now is a good time to contact us and set up a time to come in so we can look ahead and put plans in place to help you make the most of your money.
Important reminder
If you contribute more than the contribution caps, you may have to pay extra tax. Also, once your funds are invested in super, you need to meet a condition of release such as retirement and reaching preservation age, to get access to the funds. The value of your investment in super can go up and down. Before making extra contributions to your super, make sure you understand and are comfortable with any risks associated with your chosen investment option.
Still have some questions?
If you want to find out how these changes could impact you before making any financial decisions, arrange to speak with one of our advisors. Call us to arrange an appointment on 02 9328 0876.
General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.
