Be ready for the July 1 superannuation changes

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One of the most significant variations to Australia’s compulsory superannuation scheme since it was introduced in 1992 is about to impact many across the country in an attempt by the Federal Government to make the superannuation playing field fairer and more equitable.

In summary, some of the major changes include:

  • Concessional Contributions will be restricted to just $25,000 a year, down from today’s $35,000 for over-49s and $30,000 for others
  • The non-concessional contribution cap drops from $180,000 per annum to $100,000 per annum
  • Retirees super savings will be capped at $1.6m, in total, that they can hold tax-free
  • If you’re under age 65, you can bring forward three years’ worth of after-tax super contributions, up to a maximum of $540,000 before July 1. After July 1, the limit will be $300,000

So, what does all this mean to the average Aussie?

Firstly, if you have the funds available before July 1, consider if its right for you to take advantage of the one-off option of bringing forward three years’ worth payments up to $540,000. You may not get this opportunity again and you may be able to add to your super balance without penalty. This is also the time you may want to consider other investment types because these changes mean that superannuation may no longer be the best option for some people.

While superannuation has always been regarded as a relatively low-risk investment, and it is still in many ways, the benefits are somewhat reduced. There are other ways to save for your retirement – the sharemarket and property investment to name two – that you might want to consider as part of your portfolio.

This means tax compliance and making decisions is likely to be a little more complicated so, you should consider asking a financial advisor for help. A good advisor will offer you investment alternatives, talk through the pitfalls and benefits of different strategies and make sure you are maximising your hard-earned dollars.

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Our Financial Planning team is made up of experienced and highly qualified professionals. Our planners believe in taking a hands on approach to developing and monitoring your financial plan in order to help you achieve your personal financial goals.

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