Big changes to super are coming soon – Are you prepared?
The most significant changes to super in 10 years are about to impact unsuspecting self-funded retirees, SMSF trustees and high income earners because of the haphazard way the changes have been introduced.
A whole bunch of changes were announced on budget night in May 2016 but since then, some of these have been removed whilst new ones have since slipped in under the radar.
What might I have missed?
- Are you are retiree with a pension over $1.6M?
Action needs to be taken before 1 July to remain compliant with the new rules. If you are deciding what needs to go back to accumulation phase, how will you decide?
Before your fund’s 2017 tax return is lodged, you need to have made your election whether you want to take up the transitional CGT relief. Since this was only announced in November 2016, a lot of trustees are not across what this involves and it can have enormous tax consequences for funds sitting on large unrealised gains. There is no one-size fits all strategy for this complex change and therefore needs to be considered on a fund by fund basis.
- Do you have an existing transition to retirement income stream (TRIS)?
It might not be worth continuing it given the loss of the tax-exempt treatment and the reduction in the concessional cap. You might be eligible to commence a retirement phase pension (which retains the tax-exempt status) and if so, do you how your TRIS can be converted to one.
- Do you have more than $1.6m in super?
Are you aware that this financial year might be your last opportunity to make a non-concessional contribution? If you are close to $1.6m, it could be worth bringing forward contributions.
- Do you have a combination of a defined benefit pension and retirement phase pension?
Your super potentially faces being wholly or partially wound back from July 1 to a taxable accumulation account as a result of the pension transfer rule.
- Does your death benefit nomination take into account the changes coming from 1 July 2017?
How your death benefit nomination is constructed, can have a significant impact on your beneficiaries with the introduction of the pension transfer cap and the inability to roll back death benefit pensions back to accumulation phase.
- Do you have an existing salary sacrifice arrangement in place?
Given the reduction of everyone’s concessional cap next year to $25,000 p.a., have you made plans to reduce your salary sacrifice arrangements to ensure you don’t exceed the lower cap? Given the change that enables everyone to make personal concessional contributions next year, you might want to consider cancelling it entirely.
What do I need to do?
If you’re someone who normally drops off your SMSF statements to your accountant after year end, it will be too late to consider some of these changes.
Our existing clients know that we’ve got things under control, to ensure everything that needs to be done, will be done in time. If you are someone (or know someone) who might be impacted by the changes mentioned above, feel free to contact us now and we can provide you with tailored advice before it’s too late. Don’t leave it until the last minute!
The benefit of having an ongoing advice relationship is that you have a professional committed to understanding all the rules as they chop and change, and apply the best strategies to your personal situation and objectives. Ideally, they’d be working closely with your fund’s accountant as well (like we do) so that everything has been considered and planned in advance.
ITL Financial Planning and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. www.fortnum.com.au. Any information on this website is general advice only and does not take into account any person's objectives, financial situation or needs. Please consider your own circumstances and consider whether the advice is right for you before making a decision. Always obtain a Product Disclosure Statement (if applicable) to understand the full implications and risks relating to the product and consider the Statement before making any decision about whether to acquire the financial product.
