This tax year will be the last for tax-deductible concessional superannuation contributions up to $30,000 for under 50s, or $35,000 for those over 50. As of the next tax year, this amount will be reduced to $25,000 for everyone.
The rules are also changing for those with account balances of $1.6mil or more. From next tax year, those account holders will no longer be able to make non-tax deductable contributions at all. Those with balances less than $1.6mil will have stricter limits on their non-tax deductable contributions as well, reducing the effective amounts to $100,000 or $300,000 for the two-year carry forward arrangements, down from $180,000 or $540,000 hbsleub.
It may be an idea to take advantage of the old rules by making a large contribution to super this tax year, funded by property sales, inheritances, or other windfalls. Greater contributions now are of most benefit to older people, as younger investors won’t be able to access their money until 60-65, depending on the fund’s rules. Older investors will also be subject to greater taxation of funds in their names, particularly those with balances over $1.6mil as these funds will have to be invested in accumulation accounts subject to 15% income tax.
So while the rules are changing, it is still possible to take advantage of the current rules for another year. Of course, the potential costs and risks must be measured, but now could be a good time to invest a little extra in your super before your opportunity has passed.