Are you aware of the upcoming changes to super?

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Legislative reforms to superannuation kick in on 1 July 2017. Here’s a description of some of the changes and how they may affect you.

From 1 July, you will only be able to transfer $1.6 million (indexed) in a tax-free account for retirement. If your super income streams are valued at more than $1.6 million on 30 June 2017, then you may need to transfer the excess to an accumulation account or take a lump sum.

There will also be a new cap of $25,000 on annual pre-tax super contributions, such as via salary sacrifice. And, you’ll only be able to make up to $100,000 per year – or up to $300,000 if eligible to use the bring-forward provisions. However, you won’t be able to make non-concessional contributions if your total superannuation balance(s) exceeds $1.6 million (indexed) by the end of the previous financial year.

The Australian Government has also reduced the threshold over which high income earners pay an additional 15% on concessional contributions – to $250,000.

In good news, if you’re less than 65 years old – or between 65 and 74 and meet certain requirements – you may be able to claim a tax deduction on personal contributions to an eligible super fund. Also, if you’re contributing super for a spouse who earns up to $40,000, you may be eligible for a spouse contribution tax offset of up to $540.

This is only a glimpse of the July reforms. It’s important to discuss the new legislation in more detail with an expert who understands your unique situation.

Boosting your super

Many individuals approaching retirement may feel concerned about superannuation reforms. However, there are many strategies that may help protect your nest egg.

For example, you may be able to boost your super via a transition to retirement (TTR) pension. If you’re at preservation age, you could increase your pre-tax contributions through salary sacrificing. You could then substitute some of your take-home pay with income from the TTR pension, and you may even be eligible for a tax deduction on your personal contributions.

But keep in mind that from July, earnings from assets that support TTR income streams will be taxed at up to 15%.

Seek advice

While you can’t control legislation changes, you can seek advice on how you can gain from the changes. A financial adviser can explain how to maintain your lifestyle and super as you reduce your work hours, or how to boost your personal super contributions.

You’ll find there are many paths to the retirement you want.

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