Here we are at the start of a new financial year and once more, superannuation has become more complex.

At the heart of the changes, which came into effect on 1st July 2017, are more stringent limits on the amount of superannuation going in as contributions and also how much capital can be moved to start a pension or multiple pensions – the limit is in aggregate.

Why is this more complex?  For those with significant assets inside superannuation or who have significant levels of life insurance inside superannuation, it means your estate plans might not work out as you would have wished.  For example, a couple have $900,000 each in pension phase of superannuation and one dies.  The death benefit instruction was to pay the pension to the survivor.   The result is that the survivor now has $1.8m in superannuation pensions and this is in breach of the $1.6m cap.

Depending upon how the death benefit instruction was made and in the case of an SMSF this is crucial, there may be a 12mth period to rectify the breach.  Otherwise, the earnings on the money will be taxed and still have to be withdrawn either back to accumulation phase or out of the superannuation area all together.   Nobody likes to pay un-necessary tax so it pays to seek appropriate advice.  Especially when you have a self managed superannuation fund.

Now lets talk about contributions.

$100,000 is the maximum annual limit of contributions to superannuation with after-tax money. IE where you are not claiming a tax deduction and otherwise known as Non-Concessional Contributions.  This is down from $180,000.  Now if your total superannuation assets across all funds is greater than $1.6m then you cannot make any Non-Concessional Contributions any more.

If you wished, you could bring forward the next TWO years contributions limits ie you could contribute up to $300,000 in one year as long as you have not already exceeded any limits in the previous 2yrs.

$25,000 is the maximum annual limit of contributions to superannuation where a tax deduction is claimed – employer and salary sacrifice mainly.  This is not subject to asset limits.

There are limits on the Spouse contributions too so be careful.

Ask Steve for advice around this to maximise your superannuation contributions and where you want to have more money in a tax effective area.  There are other choices outside of the rather complex and limiting area of superannuation and one area in particular is excellent for estate planning and many other strategies.