The 2016-17 Federal Budget announcements on superannuation have caused a lot of concern. These include:
- A $500,000 lifetime non-concessional contributions cap from Budget night
- A reduction in concessional contribution cap from 1 July 2017
- The removal of the tax exemption on earnings supporting transition to retirement income streams (TRIS) from 1 July 2017
- The extension of the 30% super contributions tax on high income earners
- Tax free super balances capped at $1.6m from 1 July 2017
Many clients have asked, what should we be doing? The main area to be mindful of is the $500,000 lifetime cap on non-concessional contributions as what you do now, may have a lasting and potentially detrimental impact.
Under the current rules, you can use the ‘bring forward rule’ and contribute up to $540,000 across a 3 year period to your super fund. Anyone utilising these rules in the current year may find that the proposed rules, if they come into effect, will radically change their position.
It’s really important that anyone contemplating making large contributions to super or utilising the bring forward rule, get advice first.