5 facts about the upcoming changes to super
On 1 July 2017, a range of superannuation reforms will apply, including a reduction to the contributions caps.
This means that now is a great time to ensure your super strategy is as tax-effective as it can be.
Here are 5 facts you need to know about the changes:
Annual before-tax contributions caps will reduce to $25,000 for everyone. Currently, the cap is $30,000 p.a. if you’re aged 48 years or younger and $35,000 p.a. if you’re aged 49 or over. If you contribute above the new $25,000 cap after 01 July 2017, penalties may apply through additional tax.
Before-tax contributions are also referred to as ‘concessional’ contributions and they include salary sacrifice, personal contributions claimed as a tax deduction and the superannuation guarantee contributions your employer makes on your behalf.
If you earn between $250,000 to $300,000 p.a. an additional 15% tax is payable on before-tax contributions (now a total of 30%).
The annual after-tax (non-concessional) contributions cap will reduce to $100,000 p.a. (currently $180,000 p.a.) and the three year cumulative cap will also reduce to $300,000 (currently $540,000).
Earning tax rates on Transition to Retirement pensions will increase to 15% (currently earnings are tax free).
A lifetime cap of $1.6 million will be introduced to tax-free pension accounts. Penalties will apply to pension account holders who have a total pension balance above this limit from 1 July 2017.
For more information or help understanding how these changes effect you, speak to one of our Financial Planners:
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This information does not take into account your objectives, financial situation or needs. Therefore you should firstly consider the appropriateness of this information and refer to the Terms and Conditions or Product Disclosure Statement (PDS) before acquiring a product. These documents are available by contacting Financial Planning on 1300 654 193.