It seems Superannuation will have an exciting year ahead of it, and if you read everything in the paper nearly every aspect will change.

There appears to be various articles centred around accountants, financial advisors and Super experts discussing what they see will be the way the Political parties will access additional money.

However at this stage neither Political party has made mention of what they plan to do in the super space.

One thing for sure is super is a ticking time bomb just waiting for someone to get their hands on, yet it still remains one of the most tax effective vehicles..

Below are some of the most common circulated readings:

  • increase tax on concessional contributions on a sliding scale based around the individuals marginal tax rate less either a 15 or 20 per cent discount. This can easily be achieved and is line with the Division 293 tax which currently taxes an additional contribution tax of 15 per cent for those on an adjustable taxable income in excess of $300,000.
  • decrease when the Division 293 tax kicks in from $300,000 to $250,000 adjusted taxable income.
  • start taxing pension withdrawals or other equivalent death tax.
  • increase income and capital gains tax rate within the superfund once income exceeds a certain level, i.e. no longer 15 per cent on income or 10 per cent on capital gains

While there is no guarantee on what will happen post budget, and as accountants with the aim to best service our clients careful planning can assist our clients.

Based on prior history; generally budget changes are not retrospective. In light of the above some of the following activities can be initiated sooner rather than later:

  • Make salary sacrifice deductions or member concessional contributions before budget date.
  • Look at the age of your clients and consider commencing pensions soon rather than later.
  • Try to bring forward as many personal deductions into this financial year to decrease personal adjusted taxable income.
  • Those clients who are older may start gifting early inheritance whilst in pension phase within the fund.
  • Older clients could establish a new superfund for the next generation utilising the non concessional caps. In effect this is forced savings for the next generation, as they will not be able to access these funds until a condition of release is met.

For more information please contact your usual Grant Thornton advisor, or:

Sharon Gdanski
Senior Manager - Private Advisory
T +61 3 8320 2230