News 06/07

Super Concepts e-SuperUpdate provides you with technical tips and updates on Self Managed Superannuation Fund topics of interest.

The changes to ‘Simplify and Streamline’ superannuation which were announced last year are now law.  Most of the changes take place from 1 July 2007, however, some commenced on 10 May last year.  The main changes are:

• No limit to the amount you can have in superannuation;
• Individuals can leave retirement savings in superannuation indefinitely;
• No tax on income streams received after reaching 60 from a taxed superannuation fund;
• No tax on lump sums received after reaching age 60 from a taxed superannuation fund;
• Streamlined rules for superannuation contributions;
• Superannuation contributions can be made up until age 75, if eligible;
• Access to the co-contributions system for self-employed people;
• Greater ability to transfer superannuation between funds.

An opportunity that commenced on 10 May 2006 is the ability to contribute up to $1 million of personal after-tax contributions (Undeducted Contributions) to superannuation.  Available to 30 June 2007 so make sure you don’t miss out!  From the 1st July 2007 limits will be reduced to $150,000 per year with an averaging of $450,000 over any three year period.

If you are under 65 yrs contributions can be made to superannuation at anytime.  For those 65 yrs or older you must meet a work test (40 hours within 30 consecutive days) in the year of the contribution.  The $1million opportunity is not available to anyone 75 and over unless they were 74 between 10 May 2006 and 5 September 2006.

The superannuation changes also provide you with the advantage of a tax free superannuation pension from taxed superannuation funds if you are over 60.  Other potential advantages of contributing to superannuation can include:

• the superannuation fund paying tax on your retirement savings at a maximum of 15% during accumulation phase;
• superannuation fund balances used to pay a pension pay no tax on earnings or capital gains;
• moving personal investments to a SMSF without the need to physically sell them.  Having the ability to manage those Capital Gains Tax liabilities that arise from the transfer of assets by making tax deductible or salary sacrifice contributions;
• individuals have the ability to claim tax deductions for personal contributions whether employed or unemployed in a financial year.

As with all changes – one size does not fit all, contact Super Concepts if you have any questions.