We are now in a new era of superannuation tax law, with lower contribution caps and restrictions on pension balances.
This brave new world brings with it a few things to note when thinking about building up your super balance:
- Concessional contribution cap is now $25,000. So if you were salary sacrificing up to $30,000 or $35,000 previously, you may need to revisit your salary sacrifice arrange to avoid breaching the cap.
- Non-concessional contribution cap is now $100,000. However, if your Total Superannuation Balance across all super funds is $1.6m or more, you cannot make non-concessional contributions. Furthermore, the “3 year bring forward” rule is much more complex (depending if transition measures apply or your Total Superannuation Balance). It is now much more important that you check with your superannuation administrator or financial planner before making non-concessional contributions if you don’t want to breach the cap.
- CGT Cap is $1.445m for 2017-18 regardless of your Total Superannuation Balance. There are planning opportunities to maximise what you can get into super depending on the timing of CGT cap contributions and non-concessional contributions. So speak to your accountant or financial planner prior to making any contributions under the CGT cap!
With the lower contributions caps and what we can get into super, it is a great wake-up call to reassess your investment mix within super to ensure it fits with your retirement plans. If you would like to take advantage of our complimentary superannuation and investment review with our financial planning partner, Liberum Financial, please contact us.