Budget Announcements- Super
Posted by Mark Richardson May 11, 2016
Last week our Federal Budget was handed down by the treasurer and whilst there were some good things coming out of it, there was a number of changes that affect what we can and can’t do with Self-Managed Super Funds. If you have one or are thinking of getting one, you need to be aware of the proposed changes that have been recommended to begin as of 1st July, 2017. All of them will have an impact on your future retirement plans.
Currently, its hard to pinpoint what the most significant change will be, given each stage will be affected.
For those who want to make a pre-tax contribution to their super, you will now be limited to a maximum annual contribution of $25,000 per member of the fund. The current rate of $30k (under 50 years) and $35k (for over 50 years) will cease. In return, the age limit has been increased from 65 to 74, meaning you can contribute for longer, but you are restricted each year on those contributions. In addition to this, any post tax contributions you make will now be capped $500,000 for the lifetime of the SMSF. The ability to contribute $180,000 PA after tax will be removed at the end of next financial year.
The government has also advised that there will be some additional taxes introduced to your SMSF. The main two here will be the taxes introduced to high SMSF balances and to anyone in the transition to retirement stage. Under the proposed changes, if an individual accumulates amounts in excess of $1.6m, they will be able to maintain this excess amount in an accumulation phase account and be taxed at 15%. The other main change here is that any asset that generates an income during the transition to retirement stage, will be taxed at 15% as per current SMSF tax rates. Both of these policies will have an affect on how your SMSF is managed.
Another one to be aware of is under the high income contribution rules. Under this change, the high income level has been reduced from $300,000 to $250,000 pa. This means that if you earn more than $250k a year, you will be taxed an additional 15% on your contributions, effectively making the tax rate 30%.
These changes are proposed to take affect from the 1st July 2017. However the election due 2nd July may have a bearing on these changes.
Should you want any further clarification or need to obtain further details, please make an appointment to speak one of our experienced Senior Accountants to talk more about these changes and what we can do for you and your Self-Managed Super Fund.
The above information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Wards Accounting Group Pty Ltd (ACN 105 280 831) ABN 32 105 280 831 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361