SUPER REFORMS
IMPACT & OPPORTUNITIES
A PRESENTATION TO
CLIENT NAME
DATE
PRESENTED BY
FIRST NAME SURNAME
JOB TITLE/POSITION
Important information and disclaimer
This presentation has been prepared by <include appropriate adviser and licensee details from template table>
This advice may not be suitable to you because it contains general advice that has not been tailored to your
personal circumstances. Please seek personal financial and tax and/or legal advice prior to acting on this
information.
Information in this presentation is accurate as at February 2017. In some cases the information has been
provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of
that information is not guaranteed in any way.
Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor
their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or
omissions in this document.
Any case studies in this presentation are for illustration purposes only. The investment returns shown in any
case studies in this presentation are hypothetical examples only and do not reflect the historical or future
returns of any specific financial products. Past performance is not a reliable guide to future returns as future
returns may differ from and be more or less volatile than past returns.
Any tax information provided in this presentation is intended as a guide only and is based on our general
understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or a
complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under
taxation law, and we recommend you consult with a registered tax agent.
Agenda
Before 1/7/2017
Opportunities
• Maximise concessional contributions
• Maximise non-concessional contributions
Key
advice
issues
• Transition to Retirement strategies
• Pension balances
From 1/7/2017
Opportunities
• Make deductible super contributions
• Make spouse contributions
• Make catch-up concessional contributions
(from 1/7/2018 and 1/7/2019)
Key
advice
issues
• Additional contributions tax for higher earners
• Insurances
• Estate planning
Pre 1/7/2017 opportunities
Maximise concessional contributions
Key examples include:
Superannuation Guarantee contributions
Salary sacrifice contributions
Personal deductible contributions
Maximise concessional contributions
Cap changes
Age
48 or under
49 or over
Annual cap amount
In 2015/16 and
From 2017/18
2016/17
$30,000
$25,000
$35,000
$25,000
DON’T EXCEED CAP – PENALTIES CAN APPLY
Maximise concessional contributions
Key issues
Employed
• Need a salary sacrifice agreement
• Can only contribute salary not yet
earned
• Take action ASAP
Selfemployed
• Can make personal deductible
contributions any time before
30 June
• But don’t leave it to last minute
Maximise non-concessional contributions
Key examples include
Personal contributions made from after tax
pay or savings
Contributions made into your super account
by your spouse
Maximise non-concessional contributions
Cap changes
Cap
Annual cap
Bring forward rule
(available if < 65)
In 2016/17
$180,000
$540,000
From 2017/18
$100,000
$300,000
• From 1/7/2017, NCCs can’t be made if have
> $1.6 million in super
• Transitional rules apply if contribute between $180,000
and $540,000 in 2015/16 or 2016/17
DON’T EXCEED CAP – PENALTIES CAN APPLY
Maximise non-concessional contributions
Potential strategies
Contribute up
to $540,000
before 30
June
Contribute up
to $180,000 in
2016/17 and
$300,000 in
2017/18
Cash out and
re-contribute
into own
super
account
Cash out and
contribute
into spouse’s
super
account
DON’T EXCEED CAP – PENALTIES CAN APPLY
Key pre 1/7/2017 advice issues
Review transition to retirement strategy
‘Transition to retirement’ (TTR) strategy
• Make salary sacrifice or personal deductible
super contributions
• Invest super in TTR pension
• Use TTR income to replace cashflow used to
make extra super contributions
Available to people who have:
• Reached preservation age
• Not yet retired
Review transition to retirement strategy
1/7/2017 changes and implications
Removal of earnings exemption
+
Reduction in contribution caps
+
Additional tax on contributions (for higher earners)
=
Reduction in potential value of TTR strategy
Review transition to retirement strategy
Possible responses
Continue
TTR
strategy
Stop
Convert to
‘account
based
pension’
Review transition to retirement strategy
Alternative TTR strategy
Cut back
work
Start TTR
pension
Replace
reduced
income
Review pension balances
1/7/2017 changes and implications
Transfer
balance
cap
• Amount is $1.6 million
• Applies to total
pension transfers
EXCESS TRANSFER BALANCE TAX MAY APPLY
Review pension balances
Possible responses
Commute to
super
Withdraw
and invest
outside
super
Excess
pension
balance
Withdraw
and invest in
spouse’s
super
SUBJECT TO CONTRIBUTION CAPS
Review pension balances
CGT relief
Available where commute back to super
Cost base reset to market value
Specific tax advice required if pension in SMSF
Post 1/7/2017 opportunities
Personal deductible contributions
1/7/2017 changes and implications
Before
1/7/2017
Must earn < 10%
of income from
employment
From
1/7/2017
All individuals who
are eligible to
contribute can
make deductible
contributions
Personal deductible contributions
1/7/2017 changes and implications
• Mary has a part time job and earns $10,000 pa
— SG is $950
— her employer does not offer salary sacrifice
• She runs her own business as a sole trader and
has income of $70,000
• This year her maximum super contributions will be
$950 (10% test works against her)
• Next year she could claim up to $24,050 personally
• Reduction in net tax $4,850
Spouse contributions
• Maximum tax offset up to $540 for contribution of $3,000
• Spouse income limits increasing on 1/7/2017
Year
2016/17
From
2017/18
Spouse income limits
For full tax offset
Cut-out limit
$10,800
$13,800
$37,000
$40,000
‘Catch-up’ concessional contributions
Unused concessional contribution cap amounts
may be ‘carried forward’ for up to 5 years
From
1/7/2018
Can start
accumulating
unused amounts
From
1/7/2019
Can start using
accumulated
amounts
Must have < $500,000 in super
‘Catch-up’ concessional contributions
Example
Year
2018/19
2019/20
2020/21
2021/22
2022/23
Cap
available^
$25,000
$30,000
$45,000
$40,000
$65,000
^ Ignores indexation of the cap
Example of
CCs made
$20,000
$10,000
$30,000
Nil
$20,000
Unused
amount
$5,000
$20,000
$15,000
$40,000
$45,000
Key post 1/7/2017 advice issues
Additional contributions tax
for higher earners
Adjusted
taxable
Income
<$250,000
$250,000 to
$300,000
$300,000+
Tax on concessional
contributions
In
From
2016/17
2017/18
15%
15%
15%
30%
30%
30%
Marginal
tax rate
From
2017/18
47%
Insurances – from 1/7/2017
Insurance
Life
Total and
Permanent
Disability
Income
Protection
Effective up-front tax
Income < $250,000 Income $250,000 +
Inside
super
0%
Outside
super
MTR
Inside
super
15%
Outside
super
47%
0%
MTR
15%
47%
0%
0%
15%
0%
MTR = Marginal Tax Rate
Estate planning
Anti-detriment payments to be abolished
Review beneficiary nominations
Consider testamentary trusts
Session recap
Before 1/7/2017
Opportunities
• Maximise concessional contributions
• Maximise non-concessional contributions
Key
advice
issues
• Transition to Retirement strategies
• Pension balances
From 1/7/2017
Opportunities
• Make deductible super contributions
• Make spouse contributions
• Make catch-up concessional contributions
(from 1/7/2018 and 1/7/2019)
Key
advice
issues
• Additional contributions tax for higher earners
• Insurances
• Estate planning
QUESTIONS
THANK YOU