Maximising your super situation

Before trying out new super strategies to cope with the proposed super changes announced in the May federal budget, it is worth noting that the budget announcements are proposals and have not been enshrined in law yet.

However, if the Coalition returns to power after the July 2 election, then it’s quite probable the budget announcements will be written into Australian law.

With this is mind, here are some things you potentially could do to maximise your situation.

Consider how much you’ve put into super as concessional contributions
A person earning $100,000 can save $8000 in tax if they salary sacrifice $20,000 a year. Until June 30 next year, if you’re over 50, your maximum contribution is $35,000 a year, and if you’re 50 years of age, it’s $30,000. From July 2017, that cap will be lowered to $25,000 for everyone.

Set up a transition to retirement income stream (TTRS)
TTRS should be set up this financial year to maximise the benefits such as a no capital gains tax and no earnings tax. Taxpayers may also benefit next financial year before the proposed introduction of earnings tax at 15 per cent and capital gains at 10 or 15 per cent depending on how long an asset is held in a fund.

Use the re-contribution strategy
Those with more than $1.6 million in their super may also benefit from using the re-contribution strategy. It could be used to withdraw money from one person’s account and re-contributed to the other’s to keep both balances below the cap.

Use the spouse contribution
Where a person earns under $37,000, their spouse can make a $3000 non-concessional super contribution, which will provide the contributor with a rebate of $540.

Leave super in accumulation mode
With the age pension assets test being lowered from $1,170,000 to an estimated $825,000 in January, couples can benefit from leaving the younger partner’s super in accumulation mode until he/she attains age pension age because their super won’t be counted towards the assets test.