As with tax planning, the secret to successful superannuation planning is of course, anticipation. It’s a case of visualising an end-point, and formulating a credible plan to get there. And the longer you have to plan, even ambitious goals become highly achievable.
But there are also from time-to-time more immediate opportunities. In November 2016 came the news that the government has legislated superannuation fund rules which will significantly change the planning landscape for many people. As always, there are winners and losers.
These new rules for the most part kick in from 1 July 2017, which means that for some, there is the window of opportunity to maximise benefits under the “old” rules.
Significantly, the new rules include a cap on pension fund size, of $1.6 million, beyond which tax benefits are reduced. Annual concessional contributions are generally capped at $25,000 going forward, and there are changes to the “bring-forward” rules. Colonial First State has reported a surge in voluntary super contributions in November and December 2016 and note that:
Those with total super balances of $1.6m or more on 30 June 2017 will effectively no longer be able to make further non-concessional contributions in the 2017–18 financial year, potentially making 2016–17 their last opportunity to make post-tax contributions.
For a fairly user-friendly discussion of the coming changes which have driven this activity, read more here: How will the new super contributions cap rules affect you? :: Colonial First State
For a more detailed overview of the new legislation along with expert commentary, this KPMG December 2016 Super Tax News report (pdf – 9 pages) is also a great guide.
Perhaps a little overshadowed in the initial commentary of the new measures is the Capital Gains Tax aspect, and how relief for Self Managed Superannuation Funds paying pensions will work after 30 June 2017. The MGI Parkinson December 2016 newsletter (pdf-4 pages) summarises the new changes, and reveals a more complex CGT landscape than might appear at first glance, including some matters still in doubt.
Here’s quick simple explanation of practical effect of the pension fund cap of $1.6 million courtesy of Green Taylor Partners
… and some common fund cap questions are answered here courtesy of Henderson Maxwell:
The Henderson Maxwell youtube channel contains a number of short videos which touch on the super changes following the passage of the new super rules in November 2016.