The new financial year brings with it a number of changes to superannuation but there are also ongoing issues that need to be considered, in particular the impact of a weakening dollar and low interest rates.

The major issues that I believe everyone should be looking at this financial year are:

Superannuation 

• Individuals over 60 can increase their concessional contributions to superannuation (Salary Sacrifice and Employer Superannuation Guarantee) from $25,000 to $35,000, starting 1 July. Given that these contributions are taxed at 15% this strategy could provide a significant tax saving for those over 60. 

• Couples with larger superannuation balances should consider equalising their superannuation balances via a withdrawal and re-contribution strategy. This strategy could minimise the potential impact of tax on superannuation earnings above $100,000 per annum. 

• The 25% discount that has been applied to account based pensions over the past few financial years has been removed. Therefore individuals drawing account based pensions from their superannuation funds will need to investigate the impact of drawing higher pensions. 

Household expenses 

• The depreciating Australian dollar is likely to result in an increase in the cost of imported goods i.e. petrol, clothing, etc. Therefore be prepared for an increase in your household expenses. 

Investments 

• With interest rates on fixed term deposits likely to remain low for the foreseeable future, it may be time for investors to consider investing in other assets i.e. blue chip Australian company shares where in many cases dividend rates are higher than term deposits rates, and capital growth is possible over the long term. 

Debt 

• Take advantage of historically low interest rates as they won’t last forever. Allocate as much cash flow as possible to the repayment of debt while interest rates remain low. This could reduce the repayment term of your loan considerably.

Please remember to consult your adviser when considering the above strategies.