Changes to super are coming!

With a new financial year almost upon us, it’s a good time to think about your finances and in particular your super, as things are set to change from 1 July 2017.

The government has introduced changes to super, aimed at tightening the rules to reduce super’s use as a tax reduction vehicle.

While there has been much talk in the media about these changes, generally they will affect only a small percentage of working Australians. Check out the key changes below and see whether your super will be affected.

Transition to Retirement Pensions

For those with a Transition to Retirement (TTR) strategy in place, the most significant change is the tax treatment of investment earnings with this product. From 1 July 2017, investment earnings within transition to retirement income stream accounts will no longer be tax-free, but will attract up to 15% tax.

In light of this change, you may wish to revisit your TTR strategy to ensure it continues to operate in a way that is beneficial to you and your particular needs.

Putting money into your super

The concessional contributions cap (or the amount of pre-tax money you can put into your super during a financial year) from 1 July 2017 will be $25,000. It is currently $35,000 for those aged 49 years and over.

From 1 July 2017, the annual non-concessional (after-tax) contributions cap will be four times the concessional (before-tax) contributions cap (that is, $25,000 x 4 = $100,000 per financial year) and indexed annually. However, there are restrictions that may apply if you have $1.4m in your super.

Spouse contributions to super

The income threshold for spouse superannuation contributions will rise to $37,000 (and phasing out at $40,000). Spouses can continue to contribute to their low income spouse’s super account with after-tax money and claim a tax offset of up to 18%.

Salary sacrifice

If your employer does not permit salary sacrifice arrangements, or if you are self-employed, you will be able to claim a tax deduction for any personal super contributions you make.

High income earners

From 1 July 2017, those earning more than $250,000 (adjusted taxable income) will pay 30% contributions tax on all concessional contributions to super.

Transferring super into income stream products

A $1.6 million transfer cap will be introduced on balances allowed to be transferred from super accounts into retirement income stream (pension) accounts. This amount will be indexed annually.

Find out more

Read more about the Super changes from 1 July 2017 and find out if they will affect you. Or call us on 1800 675 839 and speak to one of our team to get more information.