Have you considered how the new super-caps rules will affect you from 1 July 2017?
As you may know, new superannuation rules will take effect on 1 July this year. The coming changes mean you only have a short time to consider your circumstances and how the changes will affect you—and whether you could take advantage of the opportunities still available.
The changes include a reduction of the non-concessional superannuation contributions (NCC) caps—contributions made using after-tax dollars. After 1 July 2017, you will not be able to put as much after-tax money into super as you can now, without financial penalty.
Less can go into your super from 1 July 2017
Super can be a tax-effective way to invest, depending on your circumstances. But with the current NCC caps set to reduce by about 45% from 1 July 2017, the ability to benefit from tax concessions that super provides will be reduced.
From 1 July 2017, you’ll only be permitted to contribute $100,000 in after-tax dollars per year rather than the $180,000 you can right now.
Could you boost your super by up to $540,000?
If you’re under 65, you may be eligible to contribute up to three years’ worth of non-concessional contributions if you act before 1 July 2017. That means you could add up to $540,000 to your super nest egg.
After 1 July 2017, you’ll be limited to an annual amount of $100,000 (or up to $300,000 if you’re eligible to use the bring-forward rule and add three years’ worth of contributions at once). I can help you work out exactly how much you can still contribute depending on your circumstances and any previous contributions you may have made.
The new balance-limit
There is also another change in the rules that may affect you. If the total amount you hold in super exceeds $1.6 million, you won’t be allowed to make further non-concessional contributions without financial penalty after 30 June 2017.
The new $1.6 million balance-limit could affect you when you retire and want to draw an income from your super via a pension too.
Other things you need to know
Once your funds go into super you’ll only gain access to them again when you retire and reach preservation age or satisfy another condition of release. It is also important to remember that if you contribute more than these caps, you may have to pay extra tax. Before making extra contributions to your super, make sure you also understand and are comfortable with any risks associated with your chosen investment options. If you choose, I can help you weigh up whether super is the right place for you to invest.
It’s important to seek advice and give yourself enough time to understand and consider the opportunities still available before the rules change on 1 July 2017. Keep in mind that I haven’t considered your particular circumstances and because everyone’s different, you need to think about your own situation or seek my advice about how the new super rules may affect you.
Consider your options
Some of the changes to super can appear complicated and I’m here to help. Call my office on 08 9417 8211 to find out more. I’m looking forward to speaking with you.