Major changes to superannuation announced last night, more bad than good. The bottom line is, you need to start planning your retirement sooner rather than later. Speaking to a financial advisor has never been more important.
- You can now put money into super up to the age of 74 without meeting a certain set of circumstances
- There is now, no distinction between the self employed and employed when claiming a tax deduction for super contributions
- The threshold for making a spouse contribution has been lifted from $10,800 pa to $37,000 pa, the maximum tax offset remains at $540.
- The amount you can “Salary Sacrifice” has been reduced to $25,000 pa down from $30,000 & $35,000 (depending on your age) this cap includes any employer sponsored contributions as well. This will affect those planning on making large contributions closer to retirement.
- High income earners will pay 30% tax on super contributions on incomes over $250,000 pa rather than $300,000 pa previously.
- Pension accounts are limited to $1.6M in size, the balance above this must remain in superannuation. Not likely to affect many, but for some will result in more tax being paid and more complexity in their affairs.
- Tougher tax treatment for those with defined benefit accounts, mostly affecting those in SA with UniSuper, CommSuper, Super SA Lump Sum scheme and StatewideSuper – Salarylink accounts.
- Death taxes have been essentially introduced with abolishing anti-detriment benefits. To minimise death on your estate some careful planning will have to be undertaken.
- After tax contributions to super now have a lifetime limit of $500,000 rather than $180,000 pa. This is a significant reduction and will be back dated to 1 July 2007. This has big ramifications for those planning on maximising their Centrelink benefits, or contributing funds from the sale of businesses and/or investment properties to super.
- Government employees who contribute to Super SA – Triple S accounts will have their essentially unlimited contributions to superannuation brought back inline to the rest of the Australia. Fair for everyone else but a huge reduction in the potential tax savings for government employees.
- The earnings on a transition to retirement (TTR) accounts will no longer be tax free and will instead be tax at 15%, which will significantly reduce the benefits of the TTR strategy recommended to those age 55-64.
To learn more contact us on 08 8238 0100 to make an appointment with our financial advisor today.