Colin Lewis, Head of Strategic Advice at Perpetual Private
Legislative changes to superannuation are only weeks away – from 1 July 2017 the amount you can contribute to super will be capped and there will be a tax hike on contributions for high income earnings.
If you’re in a position to boost your superannuation balance, the clock is ticking. The good news is there’s still time to top up your super before the new rules come in, but you need to act quickly!
To help ensure you’re ready, Perpetual Private have created a checklist to summarise the key points to consider.
Still unsure? Don’t get caught out – seek financial advice and act before 30 June.
- Have you considered maximising your after-tax contributions?
After-tax contributions are being cut from $180k pa to $100k pa and you’ll only be able to make them if your total super is less than $1.6 million. You may be eligible to fast track up to $540k of contributions (even if your super balance is, or will be, more than $1.6 million), if you act before 1 July 2017.
- Are you maximising your before-tax contributions before they are cut?
Before-tax contributions are being cut from $30-35k pa to $25k pa from 1 July 2017.
- If you have more than $1.6 million in your pension account(s), what will you do with the excess?
Amounts in excess of $1.6 million in pension phase must be commuted back into accumulation phase or out of the super system entirely.
- Will your transition to retirement (TtR) income work for you from 1 July?
Fund earnings and capital growth in TtR income streams will no longer be tax-free. Unless you need the pension income, or can retire and convert it to a normal account-based pension, it may be in your interests to roll your TtR income stream back to super.
- Will the tax increase on concessional contributions affect you?
If your income is between $250-300k, the tax you pay on concessional contributions (before tax) doubles from 1 July 2017.
- Do you run your own SMSF and want to take advantage of capital gains tax (CGT) relief?
To take advantage of CGT relief, certain trustee decisions and actions must be taken before 1 July 2017.
- Do the super changes mean you need to review your estate plans?
Your super pension arrangements and death benefit nominations may need to be reviewed to ensure that as much as possible can remain in the concessionally taxed superannuation environment upon the death of a partner.
