Potential Changes to Superannuation - Are You Ready?
Changes may be coming to superannuation and pension rules in Australia so it is important to be prepared, writes Adelaide accountant Todd Bond.
While we can’t yet say for
sure whether or not there will be big changes to the superannuation system in the
upcoming Federal Budget, you can be certain that adequately preparing yourself
will put you in a stronger position.
The regulations surrounding pensions and super could change quickly with new government policy and guidelines. This is why it's a good idea to make the most of your present situation in line with current policies.
Contributions and Tax
The tax you pay on the contribution you make to your super depends upon how much you contribute and the type of contribution you make.
At present, the tax on your contribution can vary depending on whether you contribute it before or after the funds have been taxed. Monies that have not yet been taxed are considered concessional and will be taxed at 15%. Contributions where a tax deduction is not claimed are non-concessional and will not be taxed in your super fund, including contributions made from after tax earnings.
There are certain caps that apply to both concessional and non-concessional contributions that can be made depending on your age and work circumstances.
It can be quite beneficial to have an understanding of what your contribution caps are and to have a strategy in place to maximise the amount of money you can get into super, especially in the years leading up to retirement.
Considerations to be made prior to the 2016 Federal Budget
We have begun discussing with our clients the potential changes that may be announced during the 2016 Federal budget.
Considerations and discussions include:
· Commencing a transition to retirement pension prior to the budget date
· Bringing forward concessional and non-concessional contributions that are traditionally made in June prior to the budget date
To find out how your personal financial situation affects the future of your superannuation planning, it's best to consult with a financial expert.
Focusing in on Your Super
How can you maximise the benefits of your superannuation?
- Consider consolidating your funds into one before you retire
- Use some of the Australian Taxation Office's tools for tracking down any 'lost' or 'missing' super
- Consult with a financial expert to discover your best options for withdrawing your super
Professional financial advice will help you to understand all the options that are available to you. This will also help you to avoid any surprises concerning tax on your super.
Making use of the Government Super co-contribution
The super co-contribution is intended to help eligible people boost their retirement savings.
If you are a low or middle-income earner and make personal (after-tax) super contributions to your super fund, the government also makes a contribution (called a co-contribution) up to a maximum amount of $500.
The amount of government co-contribution you can receive depends on how much you contribute and what your income is.
Seek expert advice
The decisions you make now will have a long-term impact on your financial position. Prepare for any possible changes by educating yourself, then see an experienced accountant for a thorough assessment of your situation and how any changes to superannuation could affect you.
At Wallace Vroulis Bond, we’re happy to help. Get in touch now to arrange your appointment.