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With the pressure on the government to fix the budget deficit, rather than looking at changes to the GST, a realignment of superannuation tax concessions is high on the agenda. As a result, many people have started to question what we will see by way of tax reform and what they should do leading up to the budget on 3 May 2016.
Some issues which may be adjusted are:
Re-Contribution Strategy & Reintroducing Reasonable Benefit Limits (RBLs)
Many members are looking at this strategy for estate planning outcomes, and it’s believed the government may be looking at reintroducing reasonable benefit limits. This would limit the amount withdrawn out of a fund each year and tax some amounts of this. A strategy around this could be to even out the member balances between spouses to ensure one doesn’t have an extremely high balance, with the spouse having a very low one.
Transition to Retirement Income Streams (TRIS)
Many members have started the TRIS to help save tax via a ‘loophole’ in the system. Some believe the government will try to correct this and introduce a ‘work test’ to support the partial retirement. Regardless, any changes will take effect from 10 May 2016 – with any current TRIS arrangement remaining current (grandfathered).
Account Based Pensions
With suggestions of the government introducing a ‘ceiling’ on the concessional tax treatment of account balances in super, it may be a good idea to review the fund and start a pension prior to budget night. This will ensure it is Grandfathered (remains) and segregated against any changes.
Non-Concessional Contributions – $180,000
Currently Non-Concessional Contributions will allow you go contribute up to three years worth of limits at once for those aged under 65 years old (called the Bring Forward provision). As the government is focused on contributions going into the super fund, it’s believed that this may be adjusted. Whether it will take effect immediately or have some ‘lead time’ is something we’ll have to wait and see. But if the cash is available, it may be a case of doing this prior to budget night.
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