Downsize and SUPERSIZE your retirement savings

by Brett Cribb, Financial Adviser

While it’s common to downsize the family home when you retire, thanks to legislative changes that came into effect on 1 July 2018, downsizing to supersize your retirement savings has taken on a whole new meaning.

The ‘downsizer measure’ could enable you to boost your retirement savings by up to $300,000 each using proceeds from the sale of your family home, and enjoy the tax savings available in the super environment.

Continue reading “Downsize and SUPERSIZE your retirement savings”

7 steps to financial success

by Steve Nicholas, Financial Adviser

As you move through different phases of your life, it’s important to revisit your financial strategies including your insurances, super strategies, savings and cash flow, debt management and estate planning needs. Doing so could make an enormous difference to your long-term financial situation.

Our 7 steps to financial success  can help you stay on track and achieve your financial and lifestyle goals so you can focus on enjoying life. Continue reading “7 steps to financial success”

How to Protect the Entire Family #3 Plan early for aged care

by Financial Advisers Brett CribbSteve Nicholas and James Marshall

 

Financial planning that aims to build the current and future wealth and prosperity of the whole family must encompass the needs of everyone: children, parents, and grandparents. When financial planning is considered an intergenerational family obligation that spans all generations – young to old – then the whole family can not only gain wealth but protect it from unforeseen circumstances.

Continue reading “How to Protect the Entire Family #3 Plan early for aged care”

How Salary Sacrifice May Help You Retire With More

Our advice on superannuation is this: Do what you can, as early as you can, to take advantage of the tax-efficient savings environment that the Australian super system offers.

Your decisions around super are all the more important since 1 July 2017 as the lowered concessional contributions cap may have implications for your super strategy. Continue reading “How Salary Sacrifice May Help You Retire With More”

What Do The 1 July Super Changes Mean For You?

by James Marshall, Financial Adviser.

You may be aware that a number of significant changes to superannuation legislation became effective on 1 July 2017. These changes will have a range of impacts and you should consider whether or not you need to take action. Depending on your circumstances, doing so may help you avoid penalties and paying additional tax. Taking action now may also allow you to make the most of your opportunities for building savings for retirement.

In our changing super landscape, it is paramount that you review your super contributions strategies. For example, because your ability to make super contributions has become more restricted, you may consider contributing more into super earlier than you may have planned. The intended benefit would be to enable you to manage your contributions over time with the goal of building tax-effective retirement funds for a secure financial future.

Quick Summary: Super Changes

and what they mean for you…

In our regularly changing super landscape, it is paramount for you to regularly review your super contributions strategies. The reductions to super contributions caps mean that it may now take longer to accumulate the funds you’ll need for retirement within super’s tax-effective environment.

If, like many people, you were planning to wait until later in life before getting serious about contributing to your super, it may be time to rethink your contribution strategy and begin sooner than planned.

This summary covers changes to super contributions; contributions tax for high income earners; personal deductible contributions; and pensions.

1. Changes to Super Contributions

The concessional contributions cap is now $25,000 pa: Concessional contributions include: employer super contributions; salary sacrifice super contributions; personal tax-deductible contributions; and premiums paid into a fund for super-owned insurance policies.

The non-concessional contributions cap is now $100,000 pa: Non-concessional contributions include after-tax contributions and premiums paid into super-based insurance policies where a tax deduction is not claimed for the premium contribution.

What does this mean for you?

Depending on your circumstances, the super contributions changes may mean you need to:

  • Decide what to do with funds that you were previously contributing to super that would now exceed the cap. (If, for example, you have been making concessional contributions greater than $25,000 pa, you will no longer be able to do so. In a future article, we will suggest options for how to use the extra funds available to you given the reduced caps.)
  • Review your super contributions to ensure you unintentionally don’t breach the new caps.
  • Comply with further non-concessional contributions limits if your total balance in the super system is $1.6m and above.

2. Changes for Higher Income Earners

High income earners now pay additional contributions tax (also known as “division 293 tax’): There is an additional 15% tax on concessional super contributions if your income (defined to include a number of items – including reportable super contributions) is above the new threshold.

What does this mean for you?

Depending on your circumstances, you may now be subject to paying additional tax on concessional super contributions which will need to be taken into account in your financial planning.

3. Changes to Personal Deductible Contributions 

The 10% income test rule for personal deductible contributions has been abolished: This makes it possible for employees to claim a tax deduction on additional contributions to your super. This benefit was previously limited to those who were self-employed or received significant investment income.

What does this mean for you?

As a waged or salaried employee, you may now enjoy greater flexibility when managing your super contributions. For example, you may decide to salary sacrifice throughout the year or you can now wait until the end of the financial year to make additional contributions and decide whether or not to claim a tax deduction for those additional contributions.

Furthermore, as an employee, you can also now claim a tax deduction on premiums paid as personal deductible contributions for super-owned insurance policies.

Please note, contributions caps still apply.

4. Changes to Pensions

$1.6m transfer balance cap: The amount of super you can transfer into a tax-free pension account at retirement is limited to a $1.6m transfer balance cap (subject to indexation in $50,000 increments).

What does this mean for you?

Strategies and contributions to super and account balances need to be regularly reviewed to consider the tax effectiveness of your overall planning toward the $1.6m cap.

Transition to retirement (TTR) pensions: 

Earnings and capital gains on assets supporting TTR pensions are now taxed at a maximum 15%.

What does this mean for you?

Depending on your circumstances, a TTR pension may no longer be as tax effective, particularly if you are under 60.

Your next steps

These changes will affect different people in different ways and it’s important that you are clear about how they will affect you. The key is to seek advice as soon as possible so that you may review your circumstances and make adjustments as necessary. Please don’t hesitate to contact me for financial assistance in understanding your super situation, how the new regulations may affect you and the steps you may need to take. Please call (07) 3007 2007 or email jmarshall@stratusfinancialgroup.com.au

If you expect to have additional funds available as a result of reducing your super contributions to comply with the new caps, please look out for our next article in which we will suggest ways for you to put those funds to work with the aim of building your financial position.


Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Stratus Financial Group strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.

Taxation outcomes are illustrative only. Always confirm your tax position with a registered tax agent.