- Super reform: The final position
2016 has seen the Government make some long awaited changes to superannuation. Learn more about these changes and how they affect you.
The number of people impacted by $1.6m retirement phase cap.
The number of people impacted by drop in concessional contributions to $25k p.a.
The number of funds facing additional cost and complexity.
The number of estate plans impacted due to death benefit changes.
$1.6m Transfer Cap for Retirement
- Limits the amount of tax free assets in superannuation.
- Cap is tested when transferring to or from pension accounts. Subsequent changes in market values (gains or losses) are not counted.
- You must pay tax the 'notional earnings' on any excess @ 15% for first excess; 30% for any subsequent excess.
- Potential issues for pension accounts that are non-commutable, or those that are reversionary.
- Capital gains tax relief available if assets need to be removed from pension phase
$25k Concessional Contribution Limit p.a. (for all, regardless of age)
- Catch up contributions allowed for unused cap within 5 years (but only if <$500k total in superannuation). Applies from 1 July 2018.
- Work test will continue to apply for those aged 65 – 75.
- Ability to claim tax deductions available for contributions paid personally
- Additional tax payable on contributions if income is >$250k p.a.
$100k Non-Concessional Contribution Limit p.a. (only if <$1.6m total superannuation)
- No ability to contribute after tax monies into super if total of superannuation interests exceed $1.6m.
- 3 year bring forward contributions, for under 65, but requires additional assessment against total super balances each year, with limitations if >$1.4m.
- Transitional rules can provide one off opportunity to contribute up to $540k before 30 June 2017 irrespective of current balances.
- Work test still applies for those aged between 65 and 75.
1. What are all of my superannuation interests?
2. Do they exceed the $1.6m threshold?
3. What contributions can I make before 30 June 2017?
4. What will I be limited to after 30 June 2017?
5. Do my pensions need restructure before 30 June 2017?
6. Should I make CGT elections for each investment?
7. Is there a need to sell assets?
8. What is my current estate plan?
9. Will my estate plan remain appropriate?