If you hope to retire in the next five to ten years and want to boost your super balance, you must act now before your ability to make after-tax contributions is significantly reduced.
In addition to pre-tax contributions to super, such as employer contributions and salary sacrifice contributions, you can also make after-tax or non-concessional contributions.
From 1 July 2017, your capacity to contribute large sums of money through non-concessional contributions will be reduced when the cap decreases from the current $180,000 to $100,000 per annum.
You also have a limited opportunity to take advantage of the bring-forward rule which allows you to contribute up to $540,000 in after-tax contributions this financial year.
If you have large sums of money available, for example from an inheritance or from the sale of a property or shares, there are strategies you can implement to build your super balance before the caps for after-tax contributions are reduced. These include:
- Maximising your non-concessional contributions by contributing up to $180,000 to your super before June 30, 2017. From 1 July, 2017, this annual amount will be reduced to $100,000 per annum;
- Capitalising on the bring-forward rule by contributing up to three years of non-concessional contributions, up to $540,000, before June 30, 2017. The amount you can contribute through the bring-forward rule will be reduced to $300,000 from 1 July, 2017.
It’s also important to note that a new $1.6 Million balance transfer cap will also be introduced on 1 July, 2017. If you have reached $1.6 Million in a pension phase of super (which is tax free), you will no longer be able to make non-concessional contributions. If your super balance in pension phase exceeds $1.6 Million you will also need to reduce the amount held in pension phase. There are a number of strategies available, however it’s important to seek advice for your specific circumstances as tax implications may apply.
All super contributions are preserved until you meet a condition of release, usually retirement. If you exceed the caps associated with concessional or non-concessional contributions you will be subject to penalties.
RV Partners are leading SMSF experts and superannuation strategists, offering services and advice in all areas of superannuation including SMSF investment strategies, Limited Recourse Borrowing Arrangements, Pension and Centrelink strategies and Estate Planning. We are CPA accredited SMSF specialists and registered ASIC SMSF Auditors.
If you would like to know more about the super changes and how they may affect your superannuation and retirement planning strategies, please contact us today on 03 9708 8801 or email firstname.lastname@example.org
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General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
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