SUPERCentral News
The Pension Transfer Balance Cap will be set out in Division 294 of the Income Tax Assessment Act. The comments below are based upon the application of the draft legislation (as released on Wednesday 28 September 2016).
The general pension transfer balance cap will limit, to an amount of $1.6m, the amount of super which can be converted to pension phase and thereby enjoy the earnings tax exemption which currently applies in pension phase.
This tranche covers the pension transfer balance cap, concessional contribution changes and catch up concessional contributions.
I mean - if you have a client who already has a Will which includes a testamentary trust, and that client (hopefully many years afterwards!) dies - then, how do you actually set up that testamentary trust?
The interaction between the "bring forward" of contributions and the excess non-concessional contribution threshold is illustrated in an example which has been taken from the factsheet issued as part of the Press Release for the super changes.
SUPERCentral members can! SUPERCentral is about to amend its governing rules for the 18th time in the past 10 years...
The ability to bring forward up to 3 years' worth of non-concessional contributions will be retained. The current requirement that taxpayers be less than age 65 at any time during the first year of the 3 year bring forward period will be maintained.
It seems special transitional rules will apply where a "bring forward" period straddles 1 July 2017. The first special rule is that if the bring forward can be completed by 30 June 2017, then the $540,000 cap will apply.
This cap will now be $100,000. CGT non-concessional contributions and personal injury non-concessional contributions will not be subject to this cap and they remain unaffected by the Budget proposals.
From 1 July 2017, it seems that the precondition for making non-concessional contributions is that the taxpayer's superannuation balance must be less than $1.6m.
On Thursday 15 September 2016, the Government announced further changes to the Super Changes announced as part of the May 2016 Budget.
As advisers we are well aware that it is best for a client's private trust (be it a family trust or a self managed superannuation fund) to have a corporate trustee, for a whole host of reasons.
Our Special Counsel Superannuation, Michael Hallinan, is busily preparing the next update of our Governing Rules scheduled for October 2016 in order to ensure they contain everything necessary to support the compliance of the fund.
If the May 2016 Super Changes proceed and the $500,000 lifetime non-concessional contribution cap becomes a reality (but we await changes on this issue) - then it will be vital to know a taxpayer's non-concessional contribution balance ("NCC balance").
The Federal Court has rejected the attempt by bankruptcy trustees of a deceased super member who argued that a benefit paid to the widow of the deceased super member who was herself a bankrupt was divisible property and so vested in them.
Since 1 July 2016, only individuals who are authorised under the Corporations Act can provide financial advice in relation to self managed superannuation funds. An individual will be authorised if they are directly or indirectly licensed under the Corporations Act.
While the Government or, some elements of the Government, may be rethinking the proposed Super Changes announced in the May 2016 Budget, it should be noted that, to date, there has been no official statement as to whether there will be changes and, if so, what changes they will be.
We as advisers all should know that a Will is not enough, as it only operates when you die. If your client doesn't die but loses mental capacity (eg, due to stroke or dementia), they need to have appointed someone to be their Enduring Power of Attorney to be able to manage their financial affairs whilst the client is unable to do so for themselves. Hopefully there is no argument about that!
With the first of the "baby boomer" generation now hitting their 70's and many going into retirement mode, indications are that there will be a huge impact on the provision of aged and community care in Australia...