Recent superannuation changes

As a nation, we’re all getting older!! In recent years, Australia has seen the rise of their median population age go from 30 years old in 1985 to 37 in 2015.

And in a 2013 survey by the Australian Bureau of statistics, 14% of the Aussie population was over 65. The number of over-65 population also grew more in the last five years than the population of the younger generations.

As both the media age and the quality of life in Australia increases, it poses a threat to the pension – now regarded as living below the poverty line.

My super will protect me, won’t it?

Enter Superannuation – the system put in place by government to ensure that we all had enough income to live on after retirement without relying on the government’s coffers.

Since Superannuation was put into place in 1992, you might be interested to know, it’s oft considered one of the best standards for ‘private pension’ plans in the world.

Good, yes. Perfect, no! Part of the issue with super are the constant changes the government keeps making to it – which if you get wrong, can cost you dearly. Hence being across these changes as and when they’re made isn’t just nice to know, it’s a requirement for financial health.

Superannuation changes you need to be across

Last year (2017), the big news (aka more superannuation changes) was the introduction of the First Home Super Saver Scheme (FHSS) to aid first time home buyers with housing affordability. And as of July 1, 2018, you can put down (some of the required deposit) money for your first home by opting to withdraw up to $15,000 from your previous super contributions.

Another lot of big superannuation changes coming into effect July 1, 2018 is the Downsizer contributions. This will see those aged 65 years and over able to contribute towards their superannuation from the sale of their home – primary residence.

Important to note about these superannuation changes are the following;

• if you are 65 years old and over, looking to sell your house is that the contract of sale must be exchanged on or after July 1, 2018
• the title of the home in question must have been owned by you or your spouse for at least the previous 10 years.
• and the contribution must exclusively come from the proceeds of the sale. The best thing about it is that the Downsizer contribution, the maximum limit of which is $300,000, is not subject to contribution tax.

Additionally, there will be a merging of governing agencies, the Superannuation Complaints Tribunal and other financial complaints offices, into the Financial Complaints Authority. This will make it more efficient and easier for you to raise any concerns you might have and have it addressed by a singular authority; read: less run around.

Lastly, starting July 1, 2018, individuals with less than $500,000 of total Superannuation Balance will be allowed to do catch up concessional contributions. Unused cap amounts ($25,000 maximum) from the previous year may be carried over to the succeeding year.

An example of how the latest superannuation changes work

So for example, in 2018-2019, Mike’s employer made a $15,000 contribution to his Super account while Mike made no contributions at all. That would mean that his unused cap amount is $10,000. This would increase his cap amount from $25,000 to $35,000 for the following financial year (2019-2020), provided that his total Superannuation balance is less than $500,000.

These superannuation changes provide more options for people to put more money into their Super funds – as and when they can afford to and help them with flexibility regarding opportunities to maximize the benefits of Superannuation.

As always, if you’d like any help regarding the tax implications of the sale of your home or contributions to super as a result of the latest superannuation changes, we’d be delighted to talk to you. You can give us a call on 02 6023 1700 or drop us a note via the form below.