Act now to beat the super changes

Author: ME

Published at: 5/8/2017 5:00:27 PM

Act Now To Beat The Super Changes

Act now to beat the super changes

The countdown is on to 1 July 2017, when important changes will come into effect impacting how much we can add to super each year. As most working Australians have an investment in super, it’s worth knowing what’s involved and what you can do before 1 July to maximise your super savings.

  1. 1. Tighter before-tax contributions
    First up, the amount of money we can put into super each year will be reduced from 1 July. At present, before-tax contributions are limited to $30,000 annually (or $35,000 if you’re turning 50 or over before 1 July 2017). From 1 July this year, before-tax super contributions will be capped at $25,000 annually for everyone regardless of age. Bear in mind, before-tax super contributions aren’t just limited to the employer’s compulsory contributions. Salary sacrifice contributions are also included. It’s worth reviewing your salary sacrifice super contributions to be sure your total before-tax contributions don’t exceed the annual limit from July 1.

  2. 2. Less in after-tax contributions too
    The annual limit on after-tax super contributions – those amounts you add to super from your own pocket, will also be tightened from 1 July 2017. The upper limit will decrease from $180,000 per year at present, to $100,000 annually. Here too, it could be worth adding an extra $80,000 to your super ahead of the end of the financial year. If you use a self-managed super fund (SMSF), consider whether you should make an extra contribution to your savings account or term deposit.

  3. 3. Bring forward after-tax contributions
    At present, it’s possible to make three years’ worth of after-tax super contributions in a single year as long as you don’t make additional after-tax contributions in the following two years. This means you have time to make $540,000 in after-tax contributions before 1 July, which is significantly more than the $300,000 limit that will apply after that date. 

Again, if you use a SMSF it’s worth thinking about depositing this money into a savings account or term deposit. The key is to take advantage of the more generous limits that apply until 30 June.

If you have the cash available to add more to your super you should seek your own superannuation and tax advice before the calendar ticks over on 1 July.

This is general information only.