New changes to superannuation

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Superannuation Update and
SMSFs
Clive Todd
November 2016

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New Changes to Superannuation
 Concessional contribution cap cut to
$25,000 per year
 Introduction of a superannuation transfer
balance cap of $1.6 million on the amount
of superannuation an individual can
transfer into pension phase

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 The tax exemption on earnings for assets
supporting Transition to Retirement Income
Streams has ceased
 Access to concessional contributions increased
allowing employees to make personal concessional
contributions
 The income limit lowered to $250,000 for the
extra contributions tax
 Catch-up of concessional contributions allowed

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 Except catch-up concessional contributions
which will be effective from 1 July 2018
 Effective 1 July 2017

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What didn’t change?
 Tax-free withdrawal for over 60’s
 Maximum tax rate on earnings still 15%

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What is happening to non-
concessional contributions?
 Annual limit reduced to $100,000 from 1 July
2017
 “Bring forward” rule available for under 65’s
 No NCC once Total Superannuation Balance
(TSB) is $1.6 million
 Current limits of $180,000 remain for 2017
financial year

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Non-Concessional Contributions
TSB on 30 June
2017
Non-concessional
contributions cap
for the first year
Bring forward
period
Less than $1.4
million
$300,000 3 years
$1.4 million to less
than $1.5 million
$200,000 2 years
$1.5 million to less
than $1.6 million
$100,000 No bring forward
period, general non-
concessional cap
applies
$1.6 million or
more
Nil N/A

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Transfer Balance Cap (TBC)
 Legislation introduces 23 new definitions
 Available capacity tracked via Transfer
Balance Account (TBA)
 $1.6m limit a member can transfer into a
tax-free pension

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Transfer Balance Cap (TBC) (cont)
 If cap exceeded then notional earnings
taxed
 Excess can remain in accumulation
 TRIS’ don’t count
 Will be indexed (but apportioned if already
used)
 CGT Relief will apply to amount converted
to accumulation

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Self Managed Superannuation Funds (SMSFs)
Q: How many members can
a SMSF have?
A: Up to 4 members
Typically, 2 members “Mum & Dad”
Q: Who else can be a member?
A: Adult children? Yes, but consider:
 superannuation(in any fund) is a marital
asset, that can be split on divorce or de-
facto separation.
 Children cannot “inherit” their parents
superannuation. On death of the last
surviving member who is not a “tax
dependant”, all remaining benefits must be
paid out of the fund, typically to their
Estate.
Note: “tax dependant” means a spouse, or child
under age 18 or any person in an inter-dependency
relationship with you .
A: Your business partners?
Yes, but consider divorce risk and
business/partnership breakdown
A: Your unrelated employees?
No.

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Self Managed Superannuation Funds (SMSFs)
Q: What can a SMSF invest in?
A: Most investments!
Subject to some restrictions like including lending the
SMSF’s money to yourself, your relatives or your
business.
 Real Estate
Typical SMSF investments:
 Cash
 Fixed interest e.g. bonds term deposits
 Listed Shares

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Can a SMSF be used for Angel
Investing?
Yes, but there are considerations:
 Acquisition from related parties
 In-house asset restrictions
 Ongoing audit requirements

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Disclaimers
This document contains information in summary form and is therefore intended for general guidance only. It is
not intended to be a substitute for detailed research or the exercise of professional judgement. It does not
purport to be comprehensive or to render professional advice. The reader should not act on the basis of any
matter contained in this publication without first obtaining specific professional advice.
We believe that the statements made by us in this document are accurate but no warranty of accuracy or
reliability is given. Our conclusions are based on interpretations of accounting standards and other relevant
professional pronouncements and legislation current as at the date of this document. Should the interpretations,
accounting standards, other relevant professional pronouncements or legislation change, our conclusions may not
be valid. We are under no obligation to update the matters considered in this document after its publication.
© Hanrick Curran, November 2016
All rights reserved

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Any questions?

15. Thank you
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