Superannuation changes to SMSF: Get a step ahead | KPMG | GLOBAL

Superannuation changes to self-managed super funds: Get a step ahead

Superannuation changes to SMSF: Get a step ahead

Zoe Griffiths and Lisa Hurwood outline some key questions for SMSFs to consider regarding the upcoming superannuation changes

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Significant legislative changes related to superannuation are coming into effect 1 July 2017. This superannuation reform is the most significant since the 2006/2007 budget.

For self-managed super funds, or anyone nearing retirement, now is the time to explore the updates and the steps you need to take to harness growth potential or prevent any issues. To begin, here are some key questions to consider.

Changes to contribution cap limits

From 1 July 2017 there will be changes to the contribution cap limits. In particular, where an individual’s ‘total superannuation balance’ exceeds $1.6 million, they are no longer able to make non-concessional (‘after-tax’) contributions. Ask:

  • Should I maximise my superannuation contributions before 30 June 2017?
  • If I do not have sufficient cash to make a superannuation contribution can I transfer assets into superannuation?
  • Should I give consideration to contribution splitting?

Pension changes

As part of the reform, if you have more than $1.6 million in a ‘retirement phase’ pension, you will be forced to take action to avoid excess transfer balance tax. Ask:

  • Can I implement any strategies to manage my superannuation account balance? (For example withdrawing monies and contributing superannuation for a spouse.)
  • Do I have multiple pension accounts?
  • Should I separate my superannuation interests between different funds for my accumulation account and pension account?
  • Can I take advantage of capital gains tax relief?

The tax exemption on the earnings from assets supporting a Transition to Retirement Income Stream (TRIS) will be removed. Ask:

  • Is my pension a TRIS?
  • Have I satisfied a condition of release?
  • Should I continue my TRIS?
  • Can I take advantage of capital gains tax relief?

Estate planning implications

From an estate planning perspective the major change to the legislation is the imposition of a personal $1.6 million cap on pension accounts from 1 July 2017. Ask:

  • Do I have a reversionary pension in place?
  • Does a reversionary pension achieve the best outcome for estate planning purposes?
  • What other options are available to meet my estate planning needs?
  • Should I consider a testamentary trust, superannuation proceeds trust or child pension as part of my estate planning?

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