Make the most of current superannuation benefits

With more signs pointing to a crackdown on superannuation tax breaks as part of the 2016 federal budget, now is the time to make the most of the benefits allowed under the current rules. Here are five points to consider:

• Maximise super contributions

Since there have been calls to limit how much Australians can save within the favourable tax settings of super, now may be the ideal time to start making extra contributions.

For most people, making extra super contributions feels unaffordable. But since they can make a big difference to an account balance by retirement age, it may be worth maximising your before-tax contributions if you can manage it. Before-tax (concessional) contributions are the mandatory percentage of earnings employers have to pay into your super and any additional contributions you make voluntarily through salary sacrificing.

For after-tax (non-concessional) contributions to super, individuals can bring forward three year’s worth of non-concessional contributions, which means for those who can afford it, you could tip in up to $540,000 extra now before any potential changes are made to cap super balances.

• Review pension arrangements

Taxpayers who are eligible to start a pension (aged 56 or older) should consider setting one up before May 10 (when the budget is released) in case pensions set up after this date have less flexibility.

• Share the love

Spouses who have a much larger super balance than their partner should consider evening things up, particularly if one partner is at or close to retirement age. The government will be targeting individuals with large balances, so it is important that you don’t look wealthier than you are if your super is also going to support your spouse in retirement.

Helping a spouse or family member make a top-up contribution can also result in a government co-contribution of up to $500, via the low-income co-contribution scheme that is already said to be axed in future years.

• Time asset sales

Another area of consideration is whether potential changes to CGT rules will influence the timing of asset sales. This is especially important for SMSF trustees. It may be beneficial for trustees planning to sell property or shares owned through an SMSF to do so sooner rather than later to ensure the profits go back into the fund without incurring CGT.

• Seek professional advice

Australia’s superannuation rules are incredibly complicated and everybody’s circumstances are different, so whenever possible, get professional advice before making any decisions.

Individuals should get advice to take advantage of the incentives that are in place at the moment. Starting early will give you the best chance of achieving your goals, and will also help insulate you from future changes.