July 1, 2017 wasn’t just the start of a new financial year. In many ways it was the start of a new era in superannuation in Australia, with the introduction of several key changes to superannuation rules. In preparation for the changes, Garvin Jones, Director – Superannuation at Hill Rogers, spoke at our June Twilight Seminar ‘Planning Your Future’. Garvin used his presentation to provide an overview of the main changes, as well offering some insights on how best to plan for the future and invest outside of your super.
Garvin’s key points are outlined, below. However, as always when it comes to financial matters, everyone’s superannuation position is unique and the nuances of the rule changes can be quite complex. If you have any questions or concerns about your situation post July 1, be sure to seek specialist superannuation advice from the team at Hill Rogers.
The super rules:
What’s changed since July 1?
- The caps on Non-Concessional Contributions for super funds with balances under $1.6 million have been lowered, while Non-Concessional Contributions are unavailable for balances over $1.6 million
- Concessional Contributions have also been lowered to $25,000
- Any unused portions of Concessional Contributions can be carried forward on a rolling 5-year basis, however this is only available for super balances under $500,000 (at the previous June 30)
- The 10% income test has been removed for personal super contributions
- Earnings for Transition to Retirement are no longer tax-free.
What does it mean?
Australians will be impacted by these changes in different ways. The most widespread effect will likely come from the new caps for tax-free earnings on super balances. Specifically, Australians with more than $1.6 million in their personal super account/s may need to rethink they way their super and retirement income is structured. For example, if your balance is over $1.6 million should you keep the excess in your super account/s? Could you be better off by withdrawing the difference and investing it elsewhere? Can you ‘even up’ the super balances of you and your partner? There’s no single right or wrong answer, but it’s important to ask these questions sooner rather than later.
Another potentially complex area concerns the impact of Capital Gains Tax uplift. Capital gains accrued (above the $1.6 million cap) after July 1 are technically taxable. However the portion of capital gains built up before July 1 still get some recognition and you may be eligible for tax relief. This means if you’re considering triggering a capital gain event, such as the sale of a property or other investments, be sure to seek specialist advice well beforehand.
Like to know more?
These are some of the key areas worth considering about your super right now, but they’re by no means the only ones. Hill Rogers Tax & Superannuation team has a wealth of experience and can assist you in all aspects of superannuation advice and planning. You can find out more here.