How the May Budget could affect your super and why you should act while there's still time.
Vigorous debate on tax, superannuation and pensions is to be expected in the lead up to any Federal Budget, even more so in an election year. What will be announced on Budget night is anyone’s guess, but one thing is certain: change is in the air for superannuation.
As part of a broader effort to help the budget bottom line, Australia’s $2 trillion superannuation system will be a hot topic - especially since changes to the GST are officially off the table. The first Abbott/Hockey Budget was slammed for being unfair, so policies aimed at better super tax concessions, amongst other changes, are expected.
What changes are being considered?
While the specifics are not yet clear, it’s likely the changes will centre around limiting superannuation tax breaks and the amount of additional contributions that can be made.
Some of the possibilities you can expect to be tabled include:
- Limitations on how much you can put into super at the discounted 15% tax rate
- Removal of the annual contributions cap in favour of a lifetime cap
- Limitations on or removal of Transition to Retirement pensions
- Changes to when you can access your super balance and/or the rules around access
What should I do?
If you currently have a superannuation strategy in place, it’s unlikely any changes will be applied retrospectively, thus reducing the impact on your investment. However, there are steps you can take to better protect yourself from Budget night changes to super rules:
- Bring forward any planned concessional or non-concessional super contributions
- If you are eligible (over 55), start a Transition to Retirement pension
With weeks of debate yet to unfold in the lead up to Budget night on May 10 2016, your best bet is to tune out the speculation, focusing instead on your current financial health and how your superannuation investment might weather the anticipated policy changes.
Need advice about your super strategy? Talk to an FMD adviser, or take our quick and easy online profiler to get a FREE snapshot of your financial health and find out if you are accumulting enough super today to live the the life you want tomorrow.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.