The Clock Is Ticking
Do you have a million dollars or more in super or out of super? If the answer to this question is yes then you are running out of time to make sure you are ready for the superannuation changes that take effect on 1 July, 2017.
Are you a business owner who has built a great business but not a great super balance? If the answer to this question is yes then you are also running out of time to make sure you have done all you can before 1 July, 2017 when the super changes kick in.
Did you know there has been significant changes to our superannuation system that take effect on 1 July, 2017? Key items such as maximum pension balances of $1.6 million per person, reduction to annual contribution limits and a limit on how much wealth can be contributed to super after 1 July, 2017 will be in place. You can grow your superannuation balance past $1.6 million but due to new contribution restrictions taking effect 1 July, 2017 it will be a lot harder.
You may ask why does this matter to you. I would ask in return, why are you not making sure you are maximising your benefits in superannuation? This is one of the most tax effective structures in Australia to hold some or all your wealth. If managed properly you can reduce your annual tax obligation on the earnings of your accumulated wealth. Because of this you will be better positioned to fund your own retirement and not be at the mercy of relying on a full or part pension from the government.
In my view, government funded pensions will not provide you with an income level that allows you to maintain a standard of living that gives you the choice to live life to its fullest. With an ageing population in Australia, the government will struggle to provide sufficient funding for retirees to have more than a basic existence.
The new $1.6 million limit coming into effect on 1 July, 2017 will control how much a person can have in pension mode in superannuation. This does not mean that anyone fortunate enough to have more than this in superannuation already is being forced to withdraw their excess wealth from the superannuation system. All this change is doing is limiting how much can be held in a very generous tax free environment when in pension mode.
Have you had a discussion with your financial adviser, accountant or SMSF specialist as to how to best deal with the superannuation changes? If the answer is no, you need to get in touch with them right away before time is out.
The recent Federal Budget announcements had minimal changes to superannuation but still there are some new opportunities for retirees who downsize and can maybe again make a significant contribution to superannuation if the legislation on this new measure is passed.
If you wish to discuss your own superannuation or SMSF strategies, contact the specialist PKF Superannuation team in Newcastle on (02) 4962 2688 or Sydney on (02) 8346 6000.