There is now an update to the below information as new superannuation legislation was passed on 23rd November 2016 Here's everything you need to know.
Yes, the government keeps tinkering with superannuation (despite promising not to) and while it may be frustrating, the real issue is many professionals earning good money are not on track to live the future lifestyle they want and expect due to a lack of financial planning to grow their super. Despite constantly changing legislation, super remains one of the most tax effective ways to build wealth. So get focussed on what you can control. Take our online profiler to see what lifestyle you can expect in the future based on your current super balance. Will it be frugal, modest, comfortable or no compromises? If you complete the questionnaire you'll qualify for a free hour consultation where we'll be able to offer more useful tips and suggestions for improving your current financial position at our offices in Melbourne, Brisbane and Adelaide.
Here are 7 things you need to know about the Government's latest proposed changes to super legislation
The following important changes have been announced:
- The proposed lifetime cap of $500,000 per person for non-concessional contributions will not go ahead.
- As a result, the existing non-concessional contribution cap of $180,000 per annum (or $540,000 using the bring-forward rules) will apply for the current 2016/17 financial year.
- From 1 July 2017, those with a superannuation account balance below $1.6 million will be able to make non-concessional contributions subject to the existing contribution eligibility rules.
- If you are eligible to make non-concessional contributions from 1 July 2017, they will be limited to $100,000 per annum (or $300,000 using existing bring-forward rules).
- The Government will retain the existing requirement that you must meet a work test to be able to contribute to super between ages 65 and 74 (they had originally proposed on Budget night to remove this requirement).
- There are no changes to the proposals around concessional contributions (including lowering the limit to $25,000) other than delaying the “catch-up” opportunity for those with less than $500,000 in super by 12 months to a 1 July 2018 commencement.
Some of these changes may result in the opportunity to make additional contributions to super, particularly before the new proposals take effect on 1 July 2017. However, in the absence of legislation to give effect to these measures, we recommend seeking advice before acting.
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General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977.