Super Changes - Do You Know What Changes Are Coming?

Following the recent Federal Budget announcement, we sent a communication to you which summarised the key points.  We believe however, that there is one particular announcement that requires urgent attention, particularly if you are over 50!

CONCESSIONAL CAP REDUCTION

- On the 1^st July 2012, the concessional cap will halve from $50,000 to $25,000 for all super fund members aged 50 and over, regardless of their account balance.

- The proposal to enable those aged 50 and over to contribute up to $50,000 p.a. if they have less than $500,000 in super will be delayed until 1 July 2014. This is to give the Government sufficient time to work out the details surrounding monitoring account balances and implementing the measure.

WHAT DOES THIS MEAN??

If you are over age 50 and a member of a superannuation fund there are several  considerations/actions that you should undertake:

1. Consider taking full advantage of the current cap by making concessional contributions of up to $50,000 before 30 June 2012
2. Review the concessional contributions that you make or receive from 1 July 2012 and adjust them if required to ensure that they don’t exceed the concessional contribution cap of $25,000
3. Consider making non-concessional contributions if impacted by the concessional cap reduction
4. Review contributions and income payments, particularly if you are using a Transition To Retirement strategy with an Allocated Pension

Above are four reasons you need to act now if you are over 50 years of age. 

Other considerations include:

• Co-contributions – take advantage of the Government’s $1,000 co-contribution now, as it is going to be reduced for the 2012-2013 financial year to $500
• If you have turned 65 during the current financial year, after 30 June 2012, you will no longer be able to take advantage of the 3 year bring forward non-concessional cap of $450,000.  A contribution of up to this cap amount may be useful to build super quickly and/or potentially minimise lump sum tax that may otherwise apply to taxable super components for estate planning purposes.

As you can see there are many opportunities and strategies which can be implemented depending upon eligibility and age.  It is important to note that any changes to strategy take time to review and implement and with only weeks left, we may need to have a discussion now.  To find out more, or make an appointment with your CWFS Adviser, please contact the office.