Superannuation Caps are Moving!
It is perhaps no surprise that saving for retirement seems to figure as a more important issue the older we all get, but much of the value of low-tax compounding of investment returns can be forfeited by the time we are sufficiently motivated to think about it.
The main exception is for some who can save a lot of tax by maximising their access to tax-effective superannuation contributions, but people up and down the income scale can often benefit (but not always!) from making some extra contributions.
Due to our crazy, complex tax system, saving too much for your retirement can expose you to extreme rates of tax, and this is where keeping an eye on the 'caps' you are allowed to contribute can be an important extreme tax avoidance strategy.
For the current 2014 tax year concessional contributions are limited to $25000, or $35,000 for those aged 59 years or more. This higher cap is set to be available to those aged 50 or more, from 1 July 2014 (ie the 2015 tax year).
For currently younger taxpayers, the cap of $25000 is finally set to increase too. Concessional contributions of $30000 will be allowed for the upcoming 2015 tax year.
This increase means higher non-concessional caps will also be available, so any contribution strategies currently being considered should be very carefully looked at - for instance, you could lock yourself out from accessing the higher non-concessional cap, if you trigger the 'bring forward' rule before 1 July 2014.
If you wish to maximise access to the higher concessional contribution caps as part of your salary packaging arrangements, or if you are otherwise able to access personal deductions for superannuation contributions, these changes may be very important to decisions you need to make in coming months.
For those needing assistance with tax planning, considerations about buying and selling assets and managing CGT exposure with the benefit of concessional contributions or other issues, please contact our office at any time.