With the end of the financial year fast approaching, time is running out for people to ramp up their super balances before the opportunity is gone for good, says Andrew Yee, director of superannuation at HLB Mann Judd Sydney.
“The changes coming into effect on 1 July this year will drastically reduce the amount that people can contribute to their super, so those who do have funds to put into their superannuation, should do so now or they may lose the opportunity entirely,” says Mr Yee.
“From 1 July, the non-concessional contribution cap is reducing to $100,000 a year (down from $180,000) or, if brought forward over three years, down to $300,000 (from $540,000). Further, people with more than $1.6 million in superannuation on or after 1 July 2017 will not be allowed to be make any further non-concessional contributions.
“This creates a final opportunity to maximise and for some people make non-concessional contributions to superannuation.
“In particular, small business owners who are considering transferring their business property into an SMSF or buying new business premises via an SMSF, should consider taking action now.
“Doing so before 30 June 2017 means they can take full advantage of the current contribution caps; however after 1 July 2017, the capacity for an SMSF to acquire a commercial property will be greatly reduced without having to resort to borrowing, which itself is under threat of being curtailed or even completely abolished.”
Mr Yee said that the changes due to come into effect from the start of next financial year are likely to have a significant impact on how people save for their retirement.
“In my view, this is a superannuation contribution opportunity on a par with that in the 2007 financial year, when the Government allowed everyone a “one-off” non-concessional contribution limit of $1 million.
“It means those with smaller superannuation balances have the chance to make a significant start on their retirement savings, which they may not have the opportunity to do again and those with more than $1.6 million in superannuation, it may mean their last chance to top up their superannuation.”
Mr Yee said that much of the attention on the changes coming into effect have been on the $1.6 million total superannuation balance cap.
“The fact that the $1.6 million cap has received so much attention may have lulled people into a false sense of security, allowing them to think that because they don’t have that kind of money, the superannuation changes don’t affect them.
“But the reality is that anyone who has additional funds at the moment, should take the time to understand the changes, and take action in the next month, before the opportunity is gone to make a significant difference to their superannuation,” Mr Yee says.