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Consider giving your super a boost before 1 July 2017

Did you know that the rules around superannuation contributions are changing from 1 July 2017? Find out how you can maximise your super.

Consider a boost to your super

Making extra contributions to your super can potentially lead to a big difference in your retirement. However, from 1 July 2017, the amount you can contribute to your superannuation will decrease.

Concessional (before-tax) contributions

Currently, the total amount you can contribute to your super before tax is capped at:

  • $35,000 per financial year if you’re 50 or over
  • $30,000 per financial year if you’re under 50.

 

Before tax contributions include:

  • Superannuation Guarantee (SG) contributions
  • Any other employer super contributions
  • Salary sacrificing (if you do this)
  • Any contributions you’ve claimed a tax deduction for.

 

From 1 July 2017, the cap will reduce to $25,000 per financial year (regardless of age).

Now could be a great time for you to consider boosting your super by taking advantage of the higher cap.

Non-concessional (after-tax) contributions

The current cap on after-tax contributions is $180,000 per financial year for those under 65 years. However from 1 July 2017, the cap on after –tax contributions will be reduced to $100,000. In addition, you’ll only be able to make after-tax (non-concessional) contributions if the total balance of your super is less than $1.6 million.

If you’re in a position to at the moment and have some spare cash (perhaps a bonus, dividend payments or maybe an inheritance), you might consider contributing this to your superannuation before the changes take effect.

If you’re under 65, you can bring forward up to three years of after-tax contributions, investing up to $540,000 in one go. From 1 July this year, this cap will change to $300,000.

Retired or about to retire? There are some changes you should know about

The maximum amount you can have invested in the retirement phase will change to $1.6 million from 1 July 2017.

If you’ve already retired and your balance exceeds this cap, you’ll be required to either:

  • Move the excess back to the accumulation phase or
  • Withdraw the amount as a lump sum by 1 July 2017 or have a tax penalty applied

 

Note: This deadline is 31 December 2017 if the excess amount is $100,000 or less.

If you’ve currently invested in a Transition-to-Retirement (TTR) pension, from 1 July 2017, the earnings from this pension will be taxed at up to 15% p.a. (currently it has tax-free status).

Things you should know

This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs having regard to these factors before acting on it.  It is current as at 31 March 2017.

The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. It has not been prepared by a registered tax agent. You should seek independent professional tax advice from a registered tax agent about any liabilities, obligations or claim entitlements that arise, or could arise, under a taxation law.

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis.  There will be tax consequences if you breach these caps.  For more detail, speak with a financial adviser or visit the ATO website.

Before requesting a rollover of your superannuation benefits you should consider where your future employer contributions will be paid. If you wish to change the fund into which your employer contributions are being paid, you will need to contact your employer. You should also check with your other fund(s) to determine whether there are any exit or withdrawal fees for moving your benefit, or other loss of benefits (e.g. insurance cover).  You may not receive the same type or level of benefits after the rollover and may lose any insurance entitlements you have in other fund(s).

This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material.

© Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714