Government’s new super tax changes announced in May 2016 Budget now law.
The new superannuation rules are effective from 1 July 2017 and as a result those funds with pension balances greater than $1.6m will pay a 15% tax on the investment earnings on the amount in excess of $1.6m.
In addition there will be reduced opportunities to make superannuation contributions in the future with the introduction of lower contribution caps than presently available to 30 June 2017.
The new rules do not change the way superannuation payments are taxed personally.
Capital drawdowns by way of pension or lump sum payments on or after age 60 will continue to be tax free. The new rules are complex and with the complexity comes risk that inadvertent errors or mistakes may result in tax penalties or the fund being non-complying. If you are potentially impacted by these changes then you need to consider the new rules in the context of your circumstances and plan accordingly
The new rules constitute a significant change in the superannuation landscape and appropriate planning is required going forward pre and post 30 June 2017. The changes are complex in parts and information is provided for reference purposes only.
We are currently in the process of reviewing all of our clients’ superannuation account balances and we will be in contact shortly with tailored strategic planning for those affected as well as those clients who will be affected in the near future.