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Superannuation Laws

With New Superannuation Laws Coming to Pass, Now is the Time to Act

Andrew Hewison
Managing Director
29 Nov 2016

Whether we like them or not, it’s nice to finally have some finality around the Government’s changes to superannuation.

Unfortunately, the days of ‘simple super’ are gone. The introduction of the $1.6m cap for tax free superannuation pension streams has added a layer of complexity back into superannuation not seen since the abolition of reasonable benefit limits (RBLs) in 2007.
Below I have highlighted some opportunities for consideration prior to June 30, 2017:

Withdrawal / Re-contribution 

Couples, where one spouse has a balance in excess of $1.6m (which is unrestricted/non-preserved) and the other with a lower balance and under 65 years of age, may choose for the higher superannuated spouse to withdraw a lump sum from their balance and re-contribute it as a tax free contribution for their spouse. This could either reduce the higher balance to below $1.6m, or at least reduce the excess.

Please note, available contributions caps and eligibility to withdraw and contribute must be observed.

Use existing contribution caps while they last 

If you have the ability, I strongly recommend that you consider making a lump sum tax free contribution of up to $540,000 prior to June 30 2017, before the tax free limit reduces to $300,000 on July 1. For couples under the age of 65, you could potentially contribute $1,080,000 to superannuation, as opposed to $600,000 from July 1.

If you are unable to gain access to the contribution prior to June 30 2017, you may consider borrowing some funds to contribute to your super balance. This is not without serious considerations, mainly around the certainty of funds becoming available and prevailing interest rates. Never the less, it may make sense.

Reduction in concessional contribution limit

The annual cap on concessional (before–tax) superannuation contributions will be reduced to $25,000 (currently $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise).
The options are limited here, however, where possible individuals currently salary sacrificing above their employer’s 9.5% SG should consider maximising their pre-tax contribution (if they not already).

It is more important than ever to seek professional advice as it relates to superannuation. For clients of Hewison Private Wealth, please contact your adviser if you feel these upcoming changes relate to you.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.