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Did you know the amount you can contribute to superannuation will decrease from 1 July 2017? Paying extra into your superannuation now may make a big impact later in retirement. It could mean the difference between being able to afford regular holidays or dinners out, and still being able to pay your bills at age 100. Even a little bit may make a difference.

Making before-tax contributions

Right now the total amount you can contribute to your superannuation before tax, is capped at:

• $35,000 per year if you are aged 50 or over.
• $30,000 per year if you are aged under 50.

Your before-tax contributions include your Superannuation Guarantee contributions, any other employer super contributions, salary sacrificing (if you do this) and any contributions that you have claimed a tax deduction for.

The cap will reduce to $25,000 per financial year from 1 July 2017, regardless of age.

There will be additional flexibility from 1 July 2018 if you have less than $500,000 in total superannuation which will allow you to carry forward your unused before-tax (concessional) contributions for up to five years.

Making after-tax contributions

Take advantage of the current higher after-tax contributions cap to boost your super before it changes.

From 1 July 2017, the cap on after-tax contributions will reduce to $100,000 per financial year. It’s currently $180,000 for those under 65 years. From 1 July you will also only be able to make after-tax (non-concessional) contributions if your total super balance is less than $1.6 million.

If you have spare cash on hand, whether an inheritance, dividend payments, a bonus or even just change after bills, you might consider contributing this to your superannuation sooner rather than later.

And, if you are aged under 65, you can bring forward up to three years of after-tax contributions, allowing you to invest up to $540,000 in one go. This cap will change to $300,000 from 1 July this year.

Entering retirement

If you’re retired or about to retire, there are a few changes you should know about.

From 1 July 2017, the maximum amount you can have invested in the retirement phase will be $1.6 million. If you’ve already retired and your balance exceeds this cap you will be required to either:

• Move the excess back to the accumulation phase or
• Withdraw the amount as a lump sum by 1 July 2017 or have a tax penalty applied.

Note: This deadline is 31 December 2017 if the excess amount is $100,000 or less.

If you’re currently invested in a Transition-to-Retirement (TTR) pension, from 1 July 2017, the earnings from this pension will be taxed at up to 15% pa (compared to its current tax-free status).

You may want to talk to us and evaluate whether this style of pension is still right for you.

To learn more about end of financial year strategies for your super, please don’t hesitate to contact us.