J U L Y 2017 SUPER CHANGES

Transcription

1 J U L Y 2017 SUPER CHANGES

2 The Federal Government has passed changes to superannuation legislation, making it the most significant round of changes to superannuation laws in the past decade. While these changes do not apply until 1 July 2017, anyone who is affected by these changes are encouraged to get planning soon. There will be changes to the amount of capital that an individual can transfer into their retirement phase. From July 1, 2017, the amount of the transfer balance cap will start at $1.6 million. The cap will be applied to current retirees and to individuals yet to enter retirement. JULY 1 TRANSFER BALANCE CAP $1.6m 1

3 CONCESSIONAL CONTRIBUTIONS Annual before-tax contributions caps $30,000 age 48 or under 48 $35,000 age 49 and over 49 $25,000 $25,000 for everyone JULY 1 From July 1, 2018 It s important to note that you can contribute more than the annual cap if you haven t utilised the cap in previous years (from the 2019 tax year) or if your super balance is $500,000 or less. Unused cap amounts can be brought forward for five consecutive years. If you have made personal super contributions, you will be entitled to claim a tax deduction for these contributions. Claiming tax is permitted for eligible super accounts and up to the concessional contribution cap. NON-CONCESSIONAL CONTRIBUTIONS Annual after-tax contributions caps $180,000 $100,000 OR over a three year period and only if requirements are met. OR $540,000 $300,000 over a three year period and only if requirements are met. Any contributions made between now and the 2018/19 financial year will be subject to transitional rules and regulations. It s important to note that these rules and regulations are quite complex and are best discussed with a licensed professional before any contributions are made. 2

4 TAX ON CONCESSIONAL CONTRIBUTIONS MADE WITHIN THE CAP If your current yearly income is as <$250, % <$250, % $250,000 to $300, % $250,000 to $300, % $300, % $300, % SUPER PENSION LIMITS No limit $1.6 million lifetime cap for everyone. Anyone with an existing pension over $1.6 million will be required to transfer the excess to an accumulation account. Failure to do so may result in the imposition of penalties. It s important to note that these rules and regulations are quite complex and are best discussed with a licensed professional before any changes are made. 3

5 ACCUMULATORS: UNDER 65s Reduction in non-concessional contribution caps $180,000pa $100,000pa $540,000 $300,000 The current $180,000 after-tax cap, and the three-year $540,000 bring-forward cap remains in place until June 30, From July 1, 2017, the annual non-concessional contribution cap will be reduced to $100,000 and the three-year bring forward cap will subsequently be reduced to $300,000. So what does all this mean for you? If you are approaching retirement age, you have until June 30, 2017 to use the current caps and contribute up to $540,000 this financial year. Remember, the bring forward rule allows you to bring forward three years of non-concessional contributions. In short, this rule allows you to make up to $540,000 in non-concessional contributions in a single financial year. LARGE SUPER BALANCES AND HIGH EARNERS HIGH ADVANTAGES The new super reforms are designed to trim back on advantages for people with large super balances. The Government s sole aim here is to reduce the amount of people who aren t using superannuation for its intended purpose of funding their retirement. 4

6 LOW SUPER BALANCES AND INSECURE EMPLOYMENT <$500,000 rollover concessional caps 5 Years Those who haven t had the opportunity to build their superannuation will be impacted by the latest superannuation reforms. If you have a broken work pattern, the new reforms will allow you to play catch up with your super contributions. This means anyone with a super balance below $500,000 can rollover their unused concessional caps for up to 5 years. It s important to note that this balance can be brought forward from 2018/19 financial year, which means you ll be able to take full advantage of this new rule in 2019/20. (from Tax offset for those topping up spouse s super) <$37,000 total income offset for spouse contributions Max $540 From July 1, 2017 individuals can claim an offset of up to $540 for contributions made to their spouse s super fund. This offset can only be claimed if their total income including fringe benefits and reportable employer super contributions are under $40,000. It s important to note that to receive maximum offset of $540 their total income must be below $37,000. 5

7 TRANSITIONERS: THOSE TRANSITIONING TO RETIREMENT Excess transfer balance tax $1.6 million Effective from 1 July 2017, the Government will impose a transfer cap of $1.6 million on the amount of super that can be held in a superannuation pension. It s important to note that your overall super balance can be higher than $1.6 million, but anything over $1.6 million will be subject to an excess transfer balance tax. If your spouse has a low super balance, then it might be worth exploring how you can maximise your returns as a couple. It s important to note that these rules and regulations are quite complex and are best discussed with a licensed professional before any changes are made. REMOVAL OF TAX EXEMPTION BENEFITS Tax free 15 % Any income from assets supporting the transition to retirement pension will no longer be tax-free - regardless of the date your transition commenced. From July 1, 2017, the earnings will be taxed at up to 15%. These changes are in place to ensure that this feature isn t accessed primarily for tax minimisation purposes. 6

8 GOING STRONG: OVER 65 AND WORKING superannuation work test remains Aged between Work 40hrs over 30days Although originally abolished in Budget announcements, the superannuation work test will remain. That means if you re aged between 65 and 74, you are required to work 40 hours over a consecutive 30-day period before you can make a contribution. CONTRACTORS & SELF-EMPLOYED Are you partially self-employed and partially a wage earner? If the answer is yes, then we have good news for you., the 10% rule that says you need to earn less than 10% of your income from salary or wages will be abolished. 10 % Salary & Wages It s important to remember that while all salary and wage earners will be able to contribute to super and claim a tax deduction, these contributions along with employer contributions, must remain within the reduced $25,000 concessional cap. the superannuation transfer balance cap is intended to limit the earnings tax exemption of high wealth individuals when they are receiving superannuation income benefits. 7

9 Contact an authorised team member at BDH Leaders on If you require further assistance. BDH Leaders is an authorised representative of The Leaders Investment Manager Pty Ltd AFSL Disclaimer The content and purpose of this document is to provide general information only. It is not intended as advice or recommendation and must not be relied upon as such. Prior to any action you should seek professional advice tailored to your specific circumstances. The content in this document is derived from sources (eg taxation law) believed to be accurate and current at the time of print.