New laws will limit the amount that goes into super. Are you prepared for the changes?
Following last year’s Federal Budget, new superannuation rules will take effect on 1 July this year here are some important points to consider.
How the new super rules will affect you
From 1 July, you’ll be unable to put as much money into super as you can right now.
With a tax rate of 15% on earnings, super is likely to remain one of the most tax-effective ways to invest. However with some contributions caps set to reduce by nearly 45%, less money will be allowed to benefit from the tax concessions on offer.
From 1 July, you’ll only be permitted to add up to $100,000 in after-tax dollars per year. That’s because the non-concessional contributions cap is lowering from the current cap of $180,000 per year.
Act well before 1 July
There are two key things to consider right now: the current non-concessional contributions cap of $180,000 per year and the three-year rule that could allow you to add three years’ worth of non-concessional contributions before 1 July.
That means you could add $540,000 into your super-or an adjusted amount if you’ve already made a non-concessional contribution within the last three years. You must be under 65 to take advantage of this current ruling and you must act before 1 July. After 1 July you’ll be limited to an annual amount of $100,000 or $300,000 in a three-year period.
It’s likely you won’t have $540,000 lying around but because this may be the last chance for so much of your money to benefit from super’s tax-concessions, it’s worth considering whether you can transfer the value of other assets into super.
Boost your balance until 30 June
After 30 June 2017, if the total amount you hold in super exceeds $1.6 million you won’t be allowed to make further non-concessional contributions. You now have a small window of time left to boost your super so your money can benefit from the tax leniency that applies in super.
Act now, before it’s too late
There are other changes coming to super including changing tax rules for transition-to-retirement pensions and restrictions on before-tax contributions (concessional) caps.
It’s a good time to call us so you can be confident in your understanding of the current and changing rules that will affect you. We encourage you to act now so you can explore your options in time.
Financial Planner AFP – DFP BA(Hons) EC
Authorised Representative (464725)
Gillespie Finance Directions Pty Ltd
ABN 40 122 284 888
AFS and Australian Credit Licence No 478547
Phone 02 6260 4994 – Fax 02 6260 4995
Level 1, 68-70 Dundas Court PHILLIP ACT 2606