Super Reform Bills Passed At Last!
The Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 were passed by both houses of Parliament earlier this month, finally providing some certainty for the changes that are due to commence 1 July 2017.
The changes were outlined in my October Super News update.
In your planning for the New Year, you should consider whether you will need to consult your financial planner to discuss how these changes will affect you.
Not only are there changes in store for superannuation legislation, as set out in my last super news update, there are also changes coming which may affect your Centrelink pension entitlements, as follows:
On 1 January 2017 the amount of assets above which allowances are not paid and pensions are reduced – the assets test free area - will increase to:
$250,000 for a single homeowner
$375,000 for a homeowner couple
$450,000 for a single non-homeowner
$575,000 for a non-homeowner couple
The family home is still exempt from the assets test.
Currently, for every $1,000 of assets you own over the assets test free area, your pension is reduced by $1.50 per fortnight. This is called the taper rate.
From 1 January 2017, your pension will reduce by $3 per fortnight for every $1,000 of assets you own over the asset free area.
For full details of the changes please consult the Centrelink website at https://www.humanservices.gov.au/customer/enablers/changes-pension-assets-test or call Centrelink to make an appointment.
The long awaited changes to the proposed superannuation budget reforms have been released with the majority of measures affecting the amount you can contribute to super and the tax treatment of these contributions, as well as the tax treatment of transition to retirement streams.
With 1 July 2017 as the common start date, now would be the time to consult your financial adviser about the strategies that you may wish to put in place.
Please note that your adviser will need to be properly licensed to provide you with any personal financial advice.
The reforms are set out at http://budget.gov.au/2016-17/content/glossies/tax_super/html/ with the key measures summarised below.
Please note that these measures are still subject to the passage of legislation.
No change to legislation as yet
There is nothing to report this month in terms of the budget updates as everything is still on the table.
In other news the ATO has stated that it will be looking more closely and providing further guidance on the exempt current pension income claim of funds that have segregated assets or are moving in to pension mode.
One important aspect of this is that members continue to withdraw the full amount of the minimum pension benefit which is generally advised by the accountant each year.
Superannuation Budget measures back on the table
Now that the Liberals are back in Government the superannuation measures proposed in the May budget have been put back on the table.
It appears highly unlikely that these will pass in the form currently proposed – see my previous Budget Update – however, it is still important to keep in mind that there may be a cap on your member contributions. It would be worth seeking advice if you are looking to place a large amount of money in your fund as a result of divorce, an inheritance or a sale of a farm, as there are rumours that these circumstances may turn out to be exemptions from the cap.
Brexit - What does it mean for you?
You may have heard of Brexit and the surprise result with the UK recently voting to leave the European Union.
The ramifications of this decision have been widespread with immediate falls in the sharemarkets where billions of dollars were wiped off in a day, and there is still general uncertainty about the potential impact on world economies.
If your fund is invested in Australian or overseas shares you may note that there has been a dramatic loss in the value of those investments. However; at this time, this is an unrealised loss.
Sharemarkets are subject to volatility, and this is one of the risks that Trustees consider when formulating the fund’s investment strategy.
However, the fact that shares have always eventually bounced back is the reason that they are widely considered to be an appropriate long term investment.
It would be prudent to consider your long term strategy before making any decisions about whether to hold, buy or sell shares at this time.
May budget implications for SMSF
There has been a lot of talk about the May budget and the implications for self managed super funds, possibly the most significant of which is the $500,000 cap on member (undeducted) contributions. This change, if legislated, will be retrospective, meaning that it will apply to any contributions made since 1 July 2007.
There is always a chance that the proposal will not be legislated in its current form, and prominent industry professionals are lobbying the Government to remove the retrospective aspect; however, it is essential that you consider this proposed change in any plans that you may have for future member contributions.
For more on the key budget measures Click Here