Hi Tammy, I’ve heard there are changes to Superannuation. What’s happening? Is it still a good idea to contribute to Super for retirement? Thanks, David and Josie, Freshwater
Hi David and Josie, While the Federal Government may tinker with the rules, its goal remains to encourage Australians to save for retirement by making Super an attractive investment.
From 1 July, employer Super contributions will increase from 10.5 per cent to 11 per cent. The $27,500 concessional cap is not changing, so any existing salary sacrifice arrangements should be reviewed to ensure you remain below the cap.
On 1 July, the transfer balance cap indexes from $1.7 million to $1.9 million. This cap limits how much you can convert to a pension. If you have already started a pension, you only get a proportion of the indexation. So, it may be beneficial to delay commencing a pension until the new financial year.
If your total super balance is below the transfer balance cap on 30 June, you can make a personal non-concessional contribution the following year (capped at $110,000, or up to $330,000 if eligible to use the bring forward). With the transfer balance cap indexing to $1.9 million, previously ineligible people may now be able to contribute more to Super.
The work test has been removed, so retirees can now continue to contribute up to age 75 without having to work. Though, after age 67, you will need to meet the work test if you want to claim a tax deduction on the contribution.
For super balances over $3 million, the government is proposing to increase the tax on investment earnings. The first $3 million per person would not be impacted. The government has indicated they will take this proposal to the next election.
Super continues to be a tax effective way to build wealth and should be a significant part of your retirement planning.
Quick Tips
Review your contribution strategy before 30 June to take advantage of this year’s caps. Your total super balance on 30 June determines your eligibility for contributions next financial year. So if you are expecting a payout or large capital gain next financial year, start planning before the end of this financial year.
Any questions, please speak with your financial adviser, or call me on 8376 0350.
Regards, Tammy
Financial planner Tammy Marshman of Up Wealth Management is an Authorised Representative of Consultum Financial Advisers Pty Ltd, AFSL 230323. Website: upwealthmanagement.com.au
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