SUPERANNUATION CHECKLIST FROM 1ST JULY 2017
By Paul Nicol
- With the Concessional contribution cap reducing to $25,000 from the 1st July 2017, salary sacrifice arrangements should be reviewed to ensure the new contributions limits are not inadvertently breached.
- The removal of the 10 per cent rule (which currently prevents individuals who have more than 10 per cent of their income sourced from employment being entitled to make concessional contributions) may allow many more individuals to concessionally contribute to superannuation who could not previously contribute tax effectively.
- Utilisation of spouse contribution offset, particularly given the increase in the spouse income qualification threshold. The tax offset available to individuals who make contributions on behalf of their spouse is to be extended to spouses earning up to $40,000 (from the existing $10,800) to get the $540 rebate.
- Potentially considering the utilisation of contribution splitting where spouses have unequal member balances or where one member’s balance is approaching or in fact above the $1.6 million pension transfer balance or $500,000. Individuals may be able to split up to 85 per cent of their concessional contributions with their spouse (the spouse must be below age 65) thus assisting to equalising spouse balances.
- With the limit on Non-Concessional Contributions (NCC’s) being reduced to $100,000 p.a. (or $300,000 under the bring-forward provisions) and transitional Non-concessional caps in place for those have utilised the bring-forward provisions in either 2015/16 or 2016/17, future NCC plans need to be carefully executed.
- With the removal of taxation concessions associated with Transition to Retirement (TtR) pensions, income generated from TtR pensions will lose their tax-exempt status and will be taxed at 15 per cent. Everyone running a TtR will need to reconsider their position with this strategy.
- For those of preservation age (age 57 or over), a change of work status or retirement could have a big impact on the taxation treatment of your superannuation or superannuation pensions. It is incredibly important to let your adviser know if this occurs
- Beyond 1 July 2018, the proposal to have access to unused contribution caps may benefit individuals with growing income or interrupted income. This proposal was designed to allow individuals with member balances below $500,000 to use their unused concessional caps for a period of five years and make catch-up concessional contributions.
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