SUPERCentral News
From 1 July 2017 the new contributions caps will be $25,000 per financial year for concessional contributions and $100,000 per financial year for non-concessional contributions. Concessional contributions are contributions which can be claimed as a tax deduction while non-concessional contributions are contributions which cannot be claimed as a tax deduction.
If a member's total superannuation balance immediately before the start of a financial year (or in the case of 2017/18 financial year, immediately at the start of that year) is equal to or greater than $1.6m, then no ordinary non-concessional contributions can be made.
The legislation to implement the new Fair and Sustainable Super - Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 has now been enacted. The Fair and Sustainable Super changes are the most significant changes in Superannuation since the Costello changes of 2007.
Most people think that when making a Will they have to treat their children "equally" - and that if they don't treat them all equally, then not only is that morally unfair but they're also setting themselves up for a challenge to their Will.
Now that the Fair and Sustainable Super legislation has passed both houses and it will soon receive Royal Assent, SMSFs Trustees which have not adopted the SUPERCentral Governing Rules should now consider doing so.
From 1 July 2017 these pensions will cease to provide the earnings exemption. Consequently, they will not give rise to a transfer balance account.
From the point of view of maximising the benefit of child pensions, the following general points can be made.
The application of the new rules depend on whether the source of the pension is a deceased member who had or did not have a transfer balance account.
In this situation the child will be treated as having a cap increment equal to $1.6m (which is the general transfer balance cap at 1 July 2017) in respect of each deceased member.
Child pensions have a special treatment under the Fair and Sustainable Super regime, which regime applies on and from 1 July 2017.
A child pension is simply a pension payable from a deceased member's superannuation interest which is payable to a beneficiary who is under age 18, or aged between 18 and 25 who is financially dependent upon the deceased member or who is permanently incapacitated.
The cap increment limits the amount of a child pension which can be paid as a pension.
The legislation to enact the Government's Super Changes has now been passed by both Houses and now awaits Royal Assent. The principal act is "Treasury Laws Amendment (Fair and Sustainable Superannuation) Act, 2016"- and was introduced into Parliament on 9 November 2016.
When completing an instruction form for arranging a new family trust for a client, it is very likely that the form will ask the question - Who do you want to be the "Appointor" of the trust?
Wealthy clients often hold assets in a family trust. This may be because of the trust having been set up to help save tax through splitting the income of the trust between family members on lower tax rates than the client, or perhaps the trust was set up in order to shield investment assets from the possibility of exposure to litigious claims against the client due to their profession or business. Often both reasons apply.
In relation to a current pension (ie a pension which commenced before 1 July 2017 and remains on foot after 30 June 2017), the paying fund will have to notify the ATO of the pension account balance at 30 June 2017 and the ATO will open a transfer balance account for the taxpayer and credit the 30 June 2017 balance to the transfer account.
From 1 July 2017 these pensions will no longer be entitled to the earnings tax exemption. Consequently, while these pensions remain in the "transition" phase the pension transfer cap is not relevant.
If you require advice on a particular SMSF strategy, or if perhaps you have identified a mistake and need help to consider the alternatives to correct it, we've got your back!
The personal transfer cap of a taxpayer is the transfer cap which applies to the financial year in which the taxpayer first commences a pension to which the earnings tax exemption applies.
If a pension commences on or after 1 July 2017, the super fund paying the pension will notify the ATO that the pension has commenced and the initial balance of the pension.