Changes are coming to superannuation rules that will restrict how much you can contribute. You have until 1 July 2017 to take advantage of the current $540,000 cap.
The bad news is the $1.6 Pension cap is still going ahead, BUT THE GOOD NEWS is that the $500,000 has been scrapped. This means that you now have until 1 July 2017 to take advantage of the current $540,000 contribution cap.
What’s the opportunity?
If you have a lump sum that you want to invest into super before you retire, you need to consider bringing this contribution forward and doing it now.
For example, do you:
- Have cash you are planning on contributing into super before you retire?
- Have an investment property you want to sell to fund your super balance?
- Have other assets you intend to sell to fund your super?
If you answered yes to any of these questions, we encourage you to get in contact with us right away to discuss these strategies in more detail. The long-term tax benefits will likely be substantial.
What happens from 1 July 2017?
From 1 July 2017 the rules will change resulting in you only being able to make Non-concessional contributions of:
- $100,000 per annum, or
- $300,000 in one year and then no contributions for the next 2 years.
There is a closing window to take advantage of the $540,000 contribution cap, so you need to take action. While your Ellerfield adviser will be considering this at your next review, due to the limited timeframe, if you think this applies to you, please get in touch with us right away.
Essentially, if you have an opportunity to access a lump sum and are considering the most appropriate time frame in which to access this money, you have until 30 June 2017 to take advantage of a larger contribution to super, with no tax payable on the contribution too!
*Non-concessional contributions are those that you make from after-tax funds. Employer contributions and salary sacrifice contributions are called Concessional contributions do not count towards your non-concessional cap. As a reminder, the Concessional contribution cap reduces to $25,000 for everyone from 1 July 2017.
Please also note that:
- Most Small Business CGT contributions do not count towards the Non-concessional contribution cap and the rules surrounding these have not changed,
- All of the above changes are believed to be supported by Parliament at this time, but are not officially legislation at this stage,
- The “$540,000 contribution cap “ referred to in this article requires the use of the “bring forward” rule. To be eligible for this you need not to have made more than $180,000 of Non-concessional contributions in the 2013/2014 or 2014/2015 financial years.
- The rules surrounding superannuation and contributions limits are complex, and you should speak with your adviser before taking action.