Managing the new superannuation regime
In November 2016, significant changes were made to the taxation of superannuation.
The changes will apply from 1 July 2017, and may impact your superannuation in a range of ways, for example:
- The maximum pension value will be capped at $1.6 million. Existing pensions greater than $1.6 million will have to transfer the excess into accumulation phase. This new rule enables the government to limit tax exempt superannuation fund income.
- Tax relief will be available for those already in pension by resetting the tax cost base of assets at 30 June 2017 to market value. The relief is chosen on an asset by asset basis.
- Personal after tax contributions cannot be made in the 2018 financial year if your super balance is more than $1.6 million at 30 June 2017. For some, the current financial year will be the last chance to make after-tax contributions into superannuation.
- The annual tax deductible contributions cap will be $25,000 for everyone and the after-tax annual contributions cap will be $100,000.
- The tax free character of transition to retirement pensions will end.
- Estate plans will need to be reviewed, as this super reform may change current estate plan outcomes. For example, many funds will now have to pay lump sum death benefits out of the superannuation system rather than paying the whole death benefit as a pension to the surviving spouse. This is part of the reform design.
Want to know more?
If you would like to discuss this important topic further contact our office to arrange a meeting so that together we can consider what is the best action to take in relation to your superannuation savings.
This simple summary of the changes to the taxation of superannuation is generic, and is not specific advice for you.
For any queries, please contact Michael Jones email@example.com or your CFMC director on 9252 0800.