Changes to your super
With a number of superannuation changes coming into effect on 1st July 2017, it's time to review your plan to ensure your nest egg is protected and also to make the most of new legislation.
If you are an existing Financial Planning client with Verve Group, we have taken these changes into consideration and will discuss these with you at your review appointment.
However, if you are not a Financial Planning client now is the time to act to ensure your superannuation is in order before these changes take place. Your first financial planning appointment is complimentary, so be sure to make an appointment with a Financial Adviser at Verve Group.
Non-concessional contributions (NCCs) The proposed lifetime $500,000 non-concessional contribution (NCC) cap has been replaced by an annual non-concessional $100,000 limit, down from the current $180,000. Individuals under the age of 65 will be eligible to bring forward 3 years ($300,000) of NCCs. However, when individuals reach a total superannuation balance of more than $1.6mil they will be unable to make NCCs.
Those with sufficient capital available could maximise the opportunity by using the bring-forward rule of up to $540,000 before 1 July 2017, especially those whose account balance is $1.6 million or more.
Concessional contributions (CCs) The annual concessional contributions (CCs) cap will be reduced to $25,000 (currently $30,000 and $35,000 if age 50 or over) from 1 July 2017 for individuals of all ages.
Those with sufficient surplus cash flow could use this opportunity to maximise CCs for amounts made before 1 July 2017 up to $35,000 for those who were 49 or over on 30 June 2016 and up to $30,000 for those under age 49. SMSF trustees should be mindful from 1 July 2017 of unallocated reserves if any which may, when allocated, get counted towards the CC cap.
$1.6 million pension cap From 1 July 2017, there will be a $1.6 million transfer balance cap on the total amount of accumulated superannuation an individual can transfer into the tax free retirement phase. This cap will include the value of existing retirement phase income streams just before 1 July 2017. Subsequent earnings on balances in the retirement phase will not be capped or restricted. Accumulated super in excess of $1.6mil can be retained in a member’s accumulation account (with earnings taxed at 15%) or moved outside super.
Transition to retirement (TTR) Individuals who have reached preservation age can still access a transition to retirement (TTR) income stream, but earnings on the amount supporting it will be taxed at a maximum of 15%.
From 1 July 2017, the Government will extend the tax exemption on earnings in the retirement phase to products such as deferred lifetime annuities and group self annuitisation products.
Individuals will no longer be able to elect to have some pension payments taxed as lump sums. This change may have a significant impact on TTR clients aged less than 60. This is because they will also pay tax on income payments, thereby negating the tax benefit for certain income earners. However, the strategy may still be beneficial when used for its intended purpose (ie for clients wishing to reduce employment hours while maintaining their cash flow at current levels). The change will also affect fully retired clients below age 60.
Get your super in order. Don’t hesitate to make an appointment, email Matt Carberry on email@example.com or phone Verve Group on 08 8120 4877 to book an appointment today. Important information This document has been prepared by Has Business Solutions Pty Ltd trading as Verve Group ABN 50 128 787 646. Verve Group is an authorised representative of Count. ‘Count’ and ‘Count Wealth Accountants’ are trading names of Count Financial Limited ABN 19 001 974 625, AFSL No. 227232, a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Information in this document is based on current regulatory requirements and laws, as at 3 February 2017, which may be subject to change. This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Taxation considerations are general and based on present taxation laws, rulings and their interpretation and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. If you wish to ‘opt out’ of receiving marketing material please contact your financial adviser.