Superannuation Opportunities Using the 2015/2016 Rules

hand-gavelNow that the proposed changes to superannuation from the Federal Government’s May 2016 Budget have been passed as law, you may be considering what to do next? With a little over five months to prepare and take action, let’s look at what needs attention now and what doesn’t need attention until 1 July 2017.

Non-Concessional Contributions

The new rules do not apply until after 1 July 2017, so depending on your contribution history you may be able to contribute up to $540,000 in the 2016/2017 financial year.

There are existing rules that need to be met to contribute to this level, but the important thing is that if you do qualify, you must make your contributions before 30 June 2017.

In-Specie Transfer of Assets

If you have a self-managed super fund (SMSF), you can transfer certain assets from your own name into your SMSF. The most common assets that are transferred are shares and managed funds. If you own a commercial property that is in your own name and used in your own business, you can consider transferring it to your SMSF. You can even transfer a share of it.

As the super rules apply to individuals, a couple could potentially transfer property worth $1 million to the SMSF. Again, there are certain conditions that must be met.

$1.6 Million Cap

The $1.6 million cap for super pensions will come into effect from 1 July 2017. The limit is per person so, if you are in a SMSF with a balance of more than $1.6 million, it is based on each member’s balance.

Any funds above the $1.6 million cap will need to remain in the accumulation phase, which is then taxed at the rate of 15%.

Another strategy to consider is that if you have more than $1.6 million in a pension or you have a transition to retirement pension, there is the opportunity to reset the cost base back to market value. This means that you could reduce, or even eliminate, any current unrealised gains.

Are you not sure what you need to do next? Please give us a call to discuss your options before it’s too late.