As the new financial year is upon us, we must be aware of the superannuation legislation changes announced recently. Many of these came into affect on 1st July and included:
1. Lowering the concessional contributions cap to $25,000 per annum for all – regardless of age.
This is a reduction to the current $35,000 p.a concessional contributions cap for those aged 49 and over, and to the $30,000 p.a. for those under 49. Importantly, when calculating your usage of the cap please remember that it’s inclusive of Superannuation Guarantee (SG) employer contributions.
A concessional contribution is a before-tax super contribution, and can include an employer’s Superannuation Guarantee contribution, a salary sacrificed super contribution, or for the self-employed or not employed, a tax-deductible super contribution.
2. All eligible Australians under the age of 75 are now able to claim tax deductions for personal super contributions, provided they are within the annual concessional contributions cap as highlighted above.
The introduction of this legislation will assist those Australians who may be partly self-employed and partly employed, or individuals working for employers who do not accommodate salary sacrificing. For those over 65 (and under 75), a work test is still required before any contribution to super can be made.
3. Transition to retirement pensions should now be reviewed as the advantages which once existed in many cases no longer do.
From 1 July 2017, the fund earnings on assets supporting a transition-to-retirement pension (TRIP) will no longer be exempt from tax on earnings.
In simple terms, a TRIP is no longer considered to be in pension phase and the fund taxed accordingly.
With the removal of the tax exemption on the earnings of TRIPs, these strategies in many cases will no longer provide the same tax and super saving benefits they once did. We strongly advise that you speak with us to review any existing TRIP arrangements to ensure that continuing with such a strategy will still provide some financial benefit.
Changes to the superannuation system, now more than ever highlight the need to get quality written advice before implementing any strategy. As always, if you’re unsure call us on (07) 3284 7875.
(P) (07) 3284 7875 | (F) (07) 3284 4790