Door Closing on Super Opportunities

door closing super opportunities retirement

“Our lives are defined by opportunities, even the ones we miss.”
Eric Roth

For anyone who wants a comfortable retirement, 1 July 2017 is a very important date, as this is when the majority of the government’s proposed super changes are likely to come into effect.

Although it seems like super is constantly under attack, it is still the most effective way to provide for retirement. It remains a tax-free retirement option, and the only legal way to ensure you pay no tax on ‘decent’ retirement incomes.

In fact, super is so good that the government is looking to reduce how much we can use it. One way they are doing this is by reducing the contributions you can make. Among the various proposals is a significant restriction on Non Concessional Contributions (NCCs).

What are NCCs?

An NCC is an amount that is transferred into super from after-tax monies. Over the years, it has been a very effective way to move money from you own name (where it could attract tax in retirement) into super (where it can be tax-free).

Commonly, this might occur when you receive an inheritance, take a redundancy, sell a business or realise a sum from a property sale. NCCs can also be used when you transfer an existing investment (such as a share portfolio or a commercial property), into a self-managed super fund for tax purposes.

What is changing?
Currently, anyone eligible can put $180,000 worth of NCCs into super each year. And if you’re under 65, you can make three years’ worth of NCCs in one hit – allowing $540,000 to be put into super. However, from 1 July 2017, these rules will be amended so that:

  • The annual limit is reduced to $100,000
  • The three year ‘bring forward’ limit is reduced to $300,000
  • Once you have $1.6m in super, you can no longer make NCCs at all.

These are significant changes that will greatly reduce your ability to move large sums into super.

Make the most of this window of opportunity now!

Thankfully, a window of opportunity still exists for you to move large sums into your super. While the current rules are still in place, it is possible for a couple to put over $1 million into super. Once the rules change, this opportunity will be lost forever. So now is the time to act.

If you fit into one or more of the following categories, you may be impacted by this rule change:

  • You are 50 plus, with super of $750,000 or more
  • You are aged 62 or older
  • You will have more than $1.3 million in super as at 30 June 2017
  • You have significant assets (like cash, shares, managed funds, properties) outside of super – which you may be better off having inside your super.

What’s the next step?

If you think your clients may be impacted by this change, we recommend that they seek advice immediately. With only months until this change becomes law, urgent action may be needed before this opportunity is lost forever.

Call us on 1300 ELSTON or email info@elston.com.au and we can work with you to help determine the best outcome for your clients.

WARNINGS AND DISCLOSURES: This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.

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