Following the passage of superannuation reforms through both houses of Parliament yesterday, the SMSF Association has urged SMSF members to seek out financial advice.
In a statement yesterday, managing director and chief executive of the SMSF Association Andrea Slattery welcomed the government’s superannuation reforms. However, “the work needed to be done does not end here”, she said.
“With just over seven months left of the financial year and therefore seven months left till the new super regime kicks in, now is the time for SMSF trustees, members and individuals to make themselves fully aware of the substantial changes and determine what is their best course of action to be implemented before the 30 June 2017 deadline,” Ms Slattery said.
“It’s particularly important to get on top of the changes, as the taxation advantages will be reduced after this financial year.
“I would strongly advise SMSF trustees and members that their first point of call should be their financial adviser or accountant."
Ms Slattery said key changes include the concessional contributions cap reduction, non-concessional contribution reduction and the pension transfer balance cap.
Tax deductible super contributions, also known as concessional contributions, have been significantly reduced and the current financial year is the last time the existing higher amounts can be claimed, Ms Slattery said.
The government’s decision to abandon the proposed $500,000 post-2007 lifetime cap on non-tax deductible contributions to super funds means members of all superannuation arrangements, including SMSF members, have until the end of this financial year to maximise their after-tax contributions to their superannuation account, Ms Slattery added.
“We encourage all superannuation members to seek suitably qualified professional advice as to their eligibility to maximise their entitlements under the existing rules before this cut-off date,” she said.
Further, it is also proposed that a member’s total superannuation pension balance that will be the subject of tax-free earnings will be limited to $1.6 million.
“Those taxpayers with more than $1.6 million in the pension phase of the super fund will be required to transfer excess amounts to the accumulation phase holdings where the income derived from these accounts will be taxed at 15 per cent,” Ms Slattery said.
“There are many more technical changes involved in the changes, however those above are the main ones with the widest scope.”
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