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NEWS

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IMPORTANT EOFY 2017 UPDATE for public service and ADF members: click here

Advice

Superannuation | Retirement | Aged Care

Investment | Insurance
1300 272 843

Significant Super Strategy Changes
Start 1 July 2017

With the end of the financial year fast approaching, it is a good time to review your financial plans and strategies. This is particularly important this financial year due to a number of significant superannuation changes which become effective on 1 July 2017. There are several critical strategic opportunities that you may only be able to take advantage of if you act before 30 June.

This roundup will guide you through the most important pre-30 June strategies, followed by the nice to haves.

The Team @ Bravien

Advice | Superannuation | Retirement | Aged Care | Investment | Insurance


   

Get the timing right for your super contributions.

EOFY cut off dates:
• BPay – Initiate by 26/06/2017
• DDR – Initiate by 23/06/2017
• EFT – Initiate by 26/06/2017
• Cheques – Received by 30/06/2017 at our office

 

Making the most of super

Notwithstanding recent changes, super remains a highly tax-effective structure for holding investments and planning for retirement. Current contribution limits mean that planning ahead over the longer term is the best way to maximise the benefits of super. This financial year is the last one when the concessional contributions (CC) caps (contributions from salary sacrifice and your employer combined) are:

• $30,000 if you are under 50, and
$35,000 for anyone who turned 50 and over this financial year.


From 1 July 2017, a CC cap of only $25,000 will apply to everybody, regardless of age or the person’s superannuation balance. This makes it much harder to build up that nest egg - so starting early and saving regularly is critical if you want to have a great life and lots of fun tickets later on.

 

Bearing the reduced $25,000 limit in mind, you must remember to change your salary sacrifice rate from 1 July 2017 to ensure you do not breach the cap. The limit includes employer AND salary sacrifice contributions combined.
If you are unsure, call us on 1300 272 843 before 30 June.

 

Sole traders, partners in a partnership, or retirees who intend to claim a tax deduction for personal super contributions must contribute money as a member contribution before 30 June 2017. The ‘paperwork’ requirements to qualify for a deduction for a personal superannuation contribution are not changing. You must complete a ‘Notice of Intention’ (NOI) to claim a tax deduction and lodge this with your super fund BEFORE you do your tax return.

Existing Non-Concessional Contribution (after tax personal contributions) caps continue to apply until 30 June 2017. Up to that date, you can still plough $180,000 into super in one hit or up to $540,000 if you trigger the 3-year bring-forward rule. This is a very big opportunity, and your last, before the limits drop on 1 July 2017.

From 1 July 2017, the personal contribution limit drops to $100,000 per annum or $300,000 if you claw forward for 3 years. BUT, you can only make these contributions if your super balance is under $1.6M. If you're over $1.6M after 1 July, no more personal super contributions for you - ever!

If you earn under $35,454 pa (or someone you love does), don't forget above government co-contribution. If you put in $1,000, you'll get a free $500 added.

If you have a spouse earning under $13,800 pa, add up to $3,000 to their super fund before 30 June as a spouse contribution and you'll get $540 back on your tax. 18% discount = bargain.

Not so important now, but huge from 1 July 2017, is spouse splitting. This is where you can split your super contributions with your spouse so you can both stay under the $1.6M super cap - meaning more tax free income in retirement...less tax = more fun tickets in your hand and then you can choose what to do with them.

 

 


Pensions are changing too

If you have a self managed fund and you are in pension phase, make sure you withdraw your minimum amount before 30 June 2017.

If you have more than $1.6 million in your account based pension or self managed super pension, then you must remove the excess over $1.6M by 30 June 2017. This is due to the new maximum cap for tax free pensions. So either withdraw the excess or roll it back to super accumulation phase.

If you have a public service or defined benefit pension, special rules apply. If your Comsuper, state government, Unisuper or military pension is over $50,000 pa and you feel we haven't already addressed your situation, please get in touch asap - or call us on 1300 272 843.


The tax free status of Transition to Retirement (TtR) fund earnings disappears on 1 July 2017. This means that earnings on investments inside a TtR will move from a zero tax rate to the 15% maximum tax rate applicable to an accumulation fund. This will apply to all new and existing TtR income streams; there is no grandfathering.

 

 

We will be reviewing all clients using this strategy to ensure it still makes sense to you. If the reason you have a TtR pension is:

to access super whilst still working and thereby allowing you to reduce work hours - say to play golf, hang out with grandkids, ride your bike, holiday more - we'll likely keep it in place; or

to pay off your remaining debt fast - we'll likely keep it in place.

If your TtR is only to minimise tax, it might not make sense anymore because the tax free status ends 1 July 2017.


 


Manage your Tax

There are many other tax planning opportunities:

1. Defer a large payment to the new financial year if you are retiring. A great example here is a redundancy. If you can defer your payment of lump sum long service leave or the taxable portion of your payout to a year you won't be working, that could be a big saving.


2. Manage capital gains tax by offsetting gains against capital losses if you have them. Depending on your tax situation, consider bringing a sale forward or pushing it back to the new financial year.

3. Prepay deductible expenses. A tax deduction may be claimed for up to 12 months’ worth of interest prepaid on an investment loan on a rental property, or margin loan on a share portfolio or managed investment. In addition, the payment of other deductible expenses by 30 June 2017 (such as professional memberships or pre-paying income protection insurance) gets you 100% of those deductions this financial year. As with all other strategies, you need to consider the cost and personal cash flow impact.

4. Keep your private health insurance to ensure you do not incur the extra 1.5% Medicare levy surcharge.

 

   


 

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