Opportunity Knocks on Super
Thursday, October 06, 2016
A one off opportunity now exists for many investors looking to place money into superannuation. The Federal Government has recently announced a number of changes to superannuation, particularly in relation to contribution eligibility and the amount of after-tax contributions that can made each year.
What does this mean for you?
If you are under 65: The change that may impact you the most is the removal of the proposed $500,000 lifetime cap on after-tax (or non-concessional) contributions that was to apply from 3 May 2016. As a result, the current contribution rules which allow up to $180,000 of after-tax contributions annually, remain in place this financial year. The current rules also allow those who are under age 65 at any time in 2016/17 to bring forward up to two future years of contribution entitlements, allowing a maximum amount of $540,000 by 30 June 2017.
Contributing less than $540,000 before 1 July 2017 will result in a reassessment, and subsequent reduction, of your contribution capacity in the following financial years.
From 1 July 2017 the annual limit on after-tax contributions is proposed to be reduced from $180,000 to $100,000. Those who are under age 65 at any time in the relevant financial year will still be able to bring-forward up to two years’ contributions entitlements, but the maximum contribution amount will reduced from $540,000 to $300,000. This means that this announcement presents an opportunity to maximise your superannuation contributions before the end of this financial year
To be able to make after-tax contributions after 1 July 2017, you will also need to have a total superannuation balance of less than $1.6 million as at 30 June of the previous financial year.
If you are turning 65 before 30th June 2017: read more here: Super Changes