Last month the changes to superannuation outlined in the May 2016 Federal Budget became law. It’s important to understand what these changes are and how they may affect you.
While there are a number of changes that will be made effective on 1 July 2017, below we have identified some particular areas of interest to take note of:
- Changes to the non-concessional contribution rules will see the ability to make a lump sum contribution of $540k reduced to only $300k. For those who have planned to make a contribution of this size leading in to retirement, the timing of such a contribution may now need to be reviewed in light of timescale restrictions. In addition, any relevant sale of assets to meet such a contribution may also need to be brought forward, and should be planned accordingly.
- Amendments to the Transition to Retirement scheme will almost certainly require a review to ensure that the strategy remains effective and within legislation. Aside from changes to the tax treatment of the accounts, salary sacrifice contributions may also need to be reduced in light of the concessional contribution cap being decreased.
- New rules limiting the amount of funds that can be held in the Pension phase of a superannuation fund may mean that the structure of funds need to be reviewed. Anyone with an individual balance of over $1.6m in their pension account will likely need to consider this.
For a more comprehensive list of the changes, our partner Premier SMSF has written a full summary of the changes here.
If the above changes apply to you, or you have any questions in general about the new legislation, please feel free to contact us in order to make the necessary amendments prior to the 1 July transition date.
