Plan now for the Government’s superannuation changes
Whilst most of the changes to the superannuation legislation, proposed in the recent Federal Budget, take effect from 1 July 2017, it would be prudent to review their impact on your retirement strategy now.
Are you 49 and over?
The tax deductible superannuation contribution will reduce to $25,000 per annum. Currently people over 49 can contribute $35,000 as a concessional contribution. This represents a reduction of almost 30%. This will have a major impact for people over age 49.
Do you have a Self Managed Super Fund?
People who have purchased an investment property through their Self Managed Superannuation Fund (SMSF) will only have $25,000 to meet the difference between the net rent on the property and the bank loan repayments and ongoing property costs. Where the investment property has a low rental return and/or high body corporate costs this may place a significant cash flow strain on maintaining this investment.
Another area of concern is where the property incurs a special levy for major repairs. Does the superannuation fund have significant cash to meet this commitment?
Are you drawing income from your superannuation fund?If you are receiving a Transition to Retirement Pension (TTR), that is you are drawing an income stream from your superannuation fund and you are still working, the government is removing the tax free status of the assets that support the payment of that income stream. This makes the strategy less attractive.
Do you have more than $1.6million in your superannuation fund?
If you are fortunate to have more than $1.6million in your superannuation fund this is the last year you will be able to make non-concessional contributions to your fund. That is, from 1 July 2017 you will no longer be eligible to make non-concessional contributions to your superannuation fund.
Should you require any information on the changes to superannuation please contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.