Super Contributions: Rules to take effect on July 1
In November 2016, the Federal Government announced its super reforms. The new rules have been designed to make the current system more fair and sustainable but this announcement has caused a flurry of activity amongst experienced investors and could have a pretty big effect on the plans of a lot of Australians.
At the start of the new tax year, from the 1st of July, these changes will be put in place:
The annual non-concessional contributions cap will be reduced by $80 000 for people with a total balance of up to $1.6m in super. If above this balance, after the 30th of June, you will no longer be able to make non-concessional contributions and any non-concession contributions you make beyond this limit will be taxed by 49%.
FirstChoice super announced that following this announcement, in November and December, contributions rose more than 35% compared to the two months prior. Most likely this is coming from investors taking advantage of the ‘bring-forward’ rule which lets you contribute to the value of up to three years in advance.
It is now time to approach your financial adviser about these changes, how they affect you and what your options are, if you have not done so already.
Original post from Colonial First State.