While the government hasn’t ruled out making further super changes in the Federal Budget, and it is unlikely any additional changes will affect current financial year plans for investors, anyone planning changes to their own strategies should try to implement these prior to next month’s Budget to be on the safe side, says Andrew Yee, superannuation specialist at accountants and advisers HLB Mann Judd Sydney.
“In its announcement of super reforms, the Government made no comment about whether there would be further changes to superannuation in the Budget, and the reforms recently announced may not be the end of any changes.
“Nonetheless, investors should base their immediate and short-term super planning on the current laws. Even if any further super changes are included in the Budget, it is very unlikely they will start this financial year, or will be retrospective,” Mr Yee said.
He added that, just to be on the safe side in case there are Budget changes, people could action some of their end of year activities before the Budget is announced.
This could include things such as:
- Ensuring annual concessional (tax deductible) and non-concessional (undeducted or after-tax) super contributions have been maximised.
- Ensuring super contributions are received by the super fund as soon as possible (they must be received prior to 30 June 2013 if they are to be accounted for in this financial year).
- Reviewing all super contributions made, including those by an employer on your behalf, to ensure relevant contributions caps are not breached. Compulsory super guarantee contribution payments made by employers are counted towards concessional contributions caps, as well as any super fund payments such as superannuation-based life insurance premiums.
- Making any planned transfer of assets into or out of SMSFs sooner rather than later. The government has already announced it proposes to restrict the acquisition and disposal of assets between an SMSF and a related party after 1 July 2013. For example, after that date, people will not be able to transfer, off-market, personally held listed shares into an SMSF even though the transfer is at market value.
- Anyone who has reached ‘preservation age’ (55 for those born before 1 July 1960) should consider the tax advantages of a transition to retirement strategy, as well as the opportunity to increase their contributions to super while supplementing their reduced take-home pay with a pension. People can start a superannuation pension and draw a maximum of ten percent of their account balance each year.
Mr Yee commented the Government is unlikely to tinker with this transition to retirement strategy, however it would be prudent to consider starting such a pension prior to the Budget to ensure the opportunity to do so is not lost.
“Those who find themselves no longer needing the income can always turn off the pension at a later date.
“In addition there is no maximum annual limit to account-based pensions, other than for those who are drawing a transition to retirement pension from their super fund, in which case the maximum annual limit is 10 percent.
“Taking an extra sum out of super in pension payments may be a worthwhile strategy for some this financial year.”