The biggest changes to super in 10 years…. what does it mean for you?

Your super is your money. Full stop.
It’s your future. Full stop.
And it has been significantly affected by the 1^st of July changes.

We care. You should too.

We want to help you understand the changes that affect you whether you are contributing to super, about to retire or already retired. And, while we were hoping to follow our Good, Bad and Ugly theme (did you see our last blog?) we didn’t want to come across too negative so instead… Here is our overview.

If you are CONTRIBUTING to super:

Most people making personal contributions to super will now be entitled to claim a tax deduction for their contributions…. Specifically, the10% maximum earnings condition was removed meaning there are less requirements you need to meet to claim a tax deduction for any contributions you make to super with after tax money. Read more here.

If you make over or close to $250,000 a year… What we call the Div. 293 income threshold has been reduced from $300K to $250K. This means that an individual with income and concessional super contributions > $250K threshold will have additional tax on any excess contributions. Read more here.

The annual non-concessional contribution cap was reduced from $180,000 to $100,000 per year… Yes, that also affects the ‘bring-forward’ rule. And, to make it ‘uglier’, the non-concessional contribution cap will be $0 for a financial year if you have a super balance > $1.6mil. Read more here.

The concessional contributions cap was reduced to $25,000 for everyone… No comment.

The total superannuation balance rules have complicated matters even further… The concept of ‘total superannuation balance’ has been introduced and it is relevant because it affects your eligibility for several things like: unused concessional contributions cap carry-forward, non-concessional contributions cap, Govt. co-contributions and tax offsets. Read more here.

If you or your spouse earns less than $40K, have taken time out of work or work part-time… you can ‘carry-forward’ any unused amount of your concessional contributions cap. Read more here.

If you contribute to your spouse’s super fund… the spouse income threshold has increased which means more people can claim a tax offset. Read more here.

If you are RETIRED or PLANNING to RETIRE soon:

Earnings from super assets that support a Transition to Retirement Income Stream (TRIS) will now be taxed at 15%… Previously, the fund received tax-free earnings on the super assets that support a TRIS. This is gone. And, to top it off, you can’t treat super income stream payments as lump sums for tax anymore. Read more here.

New transfer balance cap for retirement phase accounts … there is now a limit on how much of your super you can transfer from your accumulation super account (15% tax rate) to your retirement phase account (tax-free) to receive your pension income. It’s called the transfer balance cap and it starts at $1.6mil. Who thinks of these things? Read more here.

What’s the big picture?

The big picture is simple… even though these changes seem like more of a loss than a win, and despite all the “trash” that is talked for superannuation (correction: SMSFs), it is STILL one of the best structures on offer for long term wealth generation and tax savings.

In the long run, a well-implemented strategy with proactive members and a great Accountant is a mix that can even beat a Cayman Islands bank account.

The “big guys” know it… That’s why there are so many flies attracted to the jar of honey.

As long as you are proactive, really owning your super, staying up to date and surrounded by a great team of people to support you, you can use your super for what it was intended – Low Tax Wealth Creation and Retirement Planning.

For those of you who haven’t already come in to see us for your annual catch-up, please give us a call or send us an email. Now is the time to get back in control of your super and we want to help you do it.