Super Resolutions for the New Year

[ Get ready for 1 July changes ]
by Megan Kelly Published

Well that’s another year almost wrapped, and what a year it has been for the world of super! From budget announcements, to draft legislation, to the now passed biggest changes to legislation in 10 years. All of which comes into play from 1 July 2017!

So while you are taking time out to relax and reflect this holiday period, we ask you to turn your mind to your own Super and to put these few tasks on your New Year’s resolution list.


Step 1 – It’s time to work out where all your super is.


From 1 July 2017, you will need to get used to the concept of your Total Super Balance. For the first time ever, you need to not only know where all your super is, but also how much you have in all accounts. If you aren’t on top of your own super balance, it will prove difficult to get advice on what you can do with your super moving forward.


Step 2 – Work out how close you are to $1.6 million in super.


To do this, you are going to need to bring your super up-to-date. For public funds, you can call and request a member balance at any time. However, with a self-managed super fund, that isn’t so easy unless you are already set-up for real time super.

For those of our clients that are already on real-time reporting, we can hit the ground running in the New Year, and get straight to work on how the super fund changes will impact you personally. For those of our clients still preparing accounts on an annual basis, we have a bit of work to bring your fund up-to-date for the 2017 financial year to date.

With only 6 months before these changes come into effect – time is of the essence!

In case you didn't already know, you now have the option to have businessDEPOT process your SMSF on a monthly basis spreading the cost over a 12-month period and providing you with real-time reporting. 

Email me on m.kelly@businessdepot.com.au or call me on 07 3193 3000 if you would like to know more.


Step 3 – Know your individual contribution caps for the 30 June 2017 year and moving forward.

Non-concessional

This financial year will be your last chance to get the maximum of $540,000 non-concessional into super [for people under 65, who haven’t triggered the bring-forward rules in the 2015 or 2016 financial years].

From 1 July 2017 onward, your contributions caps will depend on your Total Super Balance and how close it is to the $1.6m limit with the absolute maximum being allowed in one year of $300,000.

For example, from 1 July 2017 the below table is how your non-concessional cap will work if you are under 65 and haven’t triggered the bring forward rule in the 2016 or 2017 financial year:

Total superannuation balance on 30 June 2017 Non-concessional contributions cap for the first yearBring forward period
Less than $1.4 million$300,0003 years
$1.4 million to less than $1.5 million$200,0002 years
$1.5 million to less than $1.6 million$100,000No bring forward period, general non-concessional cap applies
$1.6 million or moreNILN/A

Concessional

The 2017 financial year is also the last year that you can contribute $30,000 [if under 50] or $35,000 [if over 50] as a concessional contribution. From 1 July 2017 everyone under 75 will have a $25,000 contribution limit.


Step 4 - Review your pension planning.


If you know you are already over $1.6 million and are in pension phase, you will need to roll back a portion of pension to bring you under this cap as at 30 June 2017. This means that you need to bring your fund up-to-date before 30 June, so you know just how much you are over the $1.6 million cap!

There is a very limited transitional period allowance for people who do not exceed the $1.6 million by more than $100,000 as at 1 July 2017. For everyone else, you will be taxed at 15% on your first breach of the $1.6 million cap, and 30% for the second or any subsequent breaches.

If you are currently on a Transition to Retirement Pension, you need to consider if you can convert this pension to a full pension [accounts-based pension], or if you are better off cancelling your pension altogether.

Step 5 – CGT Relief.


If you were in pension phase as of 9 November 2016, you have the option to trigger a capital gains event for your super assets at any time between now and 30 June 2017. This election is irrevocable and has to be submitted to the tax office. But it gives you a chance to get an uplift in the cost base of your super fund assets. Given a proportion of these assets will be taxable in the future [if you have over $1.6 million in pension], this is a transitional measure to ensure you are not further disadvantaged by these changes.

There will be more guidance on how this CGT relief will work, and we will keep you updated along the way.


Step 6 – Review your estate planning

The unexpected impact of the changes to the super rules is how it impacts your estate planning. Therefore, in the next 6 months as you bring your super into line with the changes above, please make sure you consider the impact to your current estate plans.

2017 will be the year of superannuation! It is worth you taking the time to get on top of your personal situation and to understand in detail, how these changes will impact you.

For personalised advice please do not hesitate to call Megan Kelly and the super team for a full super review.


General Advice Warning:

Information provided on this website is general in nature and does not constitute financial advice. Every effort has been made to ensure that the information provided is accurate. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial adviser to take into account your particular investment objectives, financial situation and individual needs.

Depot Superannuation Pty Ltd is a corporate authorised representative (No 1240831) of Hunter Green Pty Ltd AFSL 225962.

Megan Kelly
read more by Megan Kelly

Megan’s skills in self-managed super to provide both the accounting and strategic advice solutions for clients. Her many years working with business owners on their SMSFs has meant that she understands the value of including their superannuation in a business owners overall financial plan.

Her passion is to assist client’s in taking control of their future, through supporting them in making decisions in relation to the self-managed fund and their retirement. Megan regularly provides advice in relation to investment structuring, SIS compliance as well as pension and retirement planning.

Megan has also provided specialist support in relation to estate planning, family law disputes and compliance issues. She is a member of the SMSF Association Queensland Community, and a valued member of the network of SMSF specialists.

Megan Kelly is an authorised representative [No. 1240833] of Hunter Green Pty Ltd AFSL 225962. Your Adviser may offer you services through Depot Superannuation Pty Ltd which is a separate business. Although the same Adviser may offer you services under the above businesses, each business is solely and separately responsible for the advice they each provide. In particular, Hunter Green is only responsible for the financial planning services provided by Megan Kelly.

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