- Published on 22 May 2018
- - Transition to Retirement
The 2018 federal budget has finally come and gone. There are a few key changes to take note of. Here are a list of the 2018 federal budget proposals and the potential impact if may have on you.
- Changes to concessional contributions
- From 1 July 2024 the 37 per cent income tax bracket will be removed, which means that the tax savings of making concessional contributions for people currently earning between $87,000 and $180,000 will reduce from 24 per cent to 19.5 per cent.
- Changes to the work test
- From 1 July 2019 people ages 65 to 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for 12 months from the end of the financial year in which they last met the work test.This change gives those individuals an extra year to contribute.
- Three-year audit cycle for certain SMSFs
- From 1 July 2018, SMSFs with good history, record keeping and compliance will have their audits changed from yearly to every three years.
- High earners and super
- From 1 July 2018 if an individual earns more than $273,157 and has more than one employer they can nominate their wages from certain employers are not subject to the Superannuation Guarantee rules.This change will help to avoid a breach in the concessional (before-tax) contribution cap.Those in this situation will be able to negotiate with their employers to receive additional income, which would be taxed at marginal tax rates, rather then receiving SG payments.
- Inactive super accounts
- From 1 July 2019, inactive super accounts with a balance under $6000 will be transferred to the Australian Taxation Office to help preserve the balance instead of it dwindling away in fees.Data matching will be used to try and connect with a member’s active accounts.
- Super costs
- From 1 July 2019, fees on super accounts with a balance under $6000 will be capped at 3 per cent.
- Ban on exit fees
- From 1 July 2019 all exit fees will be banned on all accounts when a fund member changes super funds.
- Insurance opt in
- For members under the age of 25 with a super balance of $6000 or less and whose account have not received a contribution in 13 months and are active will be have an opt-in arrangement for life insurance that is offered in large super funds.This will also take effect 1 July 2019.
- SMSF member increase
- The maximum number of SMSF members is going up from four to six.
- Superstream will be extended to include SMSFs, which means that members can initiate a rollover between a mainstream fund and their SMSF electronically, which would streamline the process.
LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you in selecting and then managing your retirement funds.
Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596-7733.
There is no cost or obligation for our initial conversation/meeting.
Written by Hugo Sampson of LifeTime Financial Group. A leading privately owned Melbourne Financial Planning practice.