Are you on top of changes to Superannuation brought in late last year?

A series of changes to superannuation originally proposed in the Budget became law on 23rd November 2016; finally bringing some certainty to the outlook for professionals, business owners and retirees. The majority of the changes will come into effect in July 1 2017.  This gives everyone a few months to consider the impact of the changes and how to reduce any potential negative impacts.
Below is a summary of the key changes and considerations. How they will impact you depends on your personal situation.  We will need to review your current position to maximise benefits and this process will commence in January 2017.  We can also assist friends or family who may need advice about the best way to maximise their super, minimise tax and protect their overall financial position.

Changes to contribution caps:

  • Those aged 50+ will be able to make concessional contributions of up to $35,000 for tax year ending 2016/17 
  • Those under 50 will be able to make concessional contributions of up to $30,000 in the 2016/17 tax year and $25,000 in subsequent years
  • Non concessional contributions will be capped at $180,000 in the 2016/17 tax year and $100,000 in subsequent years.  There are variations depending on each person’s circumstances e.g. there are some cases where we can apply the $540k 3-year bring-forward cap before 30 June 2017.
  • A Work Test (demonstrating at least 40 hours work in 30 days) will remain in place to determine whether those over 65 are eligible to make non-concessional contributions.  There was some speculation the Work Test would be eliminated as part of the new legislation.   

Changes to Transition to Retirement arrangements

  • Tax exempt status will be removed from Transition to Retirement income streams.  In some circumstances the fund will pay 15% tax in the 2018 financial year. Talk to us about whether this applies to you. 
  • Various transition rules, e.g. the uplift for Capital gains Tax (CGT) without having to realise the gain, will require valuation of all assets. Shares will be easy, but updated valuations will need to be completed for real estate and other assets. 

>  Other changes

  • The threshold at which Division 293 tax is payable will be reduced from incomes over $300,000 per annum up to 30 June 2017 to incomes of $250,00 from 1 July 2017.
  • The maximum amount that can be held in Pension mode is S1.6million per member

>  What it meansSeek advice on how the new contributions impact you and consider this when planning the sale of assets in the next 12-24 months. Consider how you can maximise contributions in the 2016/17 tax year before the new laws come into effect.  Be aware that the cost of compliance, particularly for those with self-managed super funds, is likely to increase in light of the requirements for new asset valuations and planning reviews.
The Mitchell Wilson team is here to answer any questions you may have. 

Posted by Doug Mitchell
<p>Doug has overseen the growth of Mitchell Wilson for two decades, where his knowledge and integrity have made him a trusted partner to business owners and entrepreneurs in industries as diverse as financial services, travel, media and transport.</p>