Just a reminder that from 1 July 2017 there will be significant changes to the superannuation system.
Now is the time to be reviewing your circumstances to ensure compliance with the new laws. All clients are unique and Pitcher Partners look forward to assisting you with your specific circumstances.
Note that now is also a perfect time to have your SMSF trust deed updated to ensure compliance with the new laws. Please contact us if you would like us to make arrangements to update of your SMSF trust deed.
Here is an update on the main superannuation reforms:
Superannuation Contributions Tax
Division 293 income threshold to reduce from $300,000 per year to $250,000 per year.
Pension balances to be capped at $1.6 million per individual from 1/7/2017.
Death benefit/reversionary pensions will be included in the beneficiary’s $1.6 million cap.
An election can be made to reset the cost base of assets currently used to support pensions in order to provide some relief from capital gains tax in the future.
Transition To Retirement Pensions
Removal of tax exemption on earnings for pension assets supporting transition to retirement pensions from 1/7/2017.
Annual cap reduced to $25,000 per year for all age groups from 1/7/2017.
Individuals with a superannuation balance less than $500,000 allowed to make additional catch-up contributions from 1 July 2018.
Annual cap of $100,000 per individual, providing their total superannuation balance is below $1.6 million.
Three year bring-forward rule to remain for individuals aged below 65, however, this will depend on their total superannuation balance.
Tax Deductions For Personal Contributions
Individuals aged up to 75 years allowed a tax deduction in their individual tax return for personal superannuation contributions, regardless of whether they earn over 10% of their income from employment activities.
Contributions Work Test
Individuals aged 65 to 74 will still need to pass a work test to be able to make voluntary superannuation contributions.
Most of the changes listed above have a start date of 1 July 2017. Note that prior to this date contribution caps will remain at their current levels.
If you have questions regarding the superannuation reforms please contact Pitcher Partners.
Any financial product advice is provided by Pitcher Partners (SA) Financial Pty Ltd (AFSL No. 487781). The information provided is general in nature and is not personal financial product advice. The information provided has been prepared without taking into account your objectives, financial situation or needs and because of this you should, before acting on it, consider the appropriateness of it having regard to your objectives, financial situation and needs. You should carefully read and consider any Product Disclosure Statement (PDS) that is relevant to any financial product that has been discussed before making any decision about whether to acquire the financial product.