As the Federal Government becomes more serious about dealing with the nation’s aging population important superannuation changes continue to be made which are aimed at encouraging people to save for retirement, reducing future demand for a tax-payer funded aged pension. In some great news, welcome changes have been made to super contribution rules encouraging people to contribute more to their retirement while they are still working.
Vision Property & Finance Financial Adviser, Leigh Johnston, says the changes are a great step forward as the nation tries to manage the ‘demographic cliff’ of retirement and falling tax revenues.
New Superannuation Concessional Contribution Rules
“From 1 July 2018, you can now carry forward unused concessional contributions on a rolling basis for 5 years, starting from the 2019-2020 financial year.”
Leigh says the new changes are targeted especially at those with smaller superannuation balances rather than people with significant amounts already accrued in their superannuation accounts.
“The only proviso is that your total Superannuation balance at the end of 30 June of the previous financial year is less than $500,000.”
Currently, the maximum you can contribute to Superannuation on a concessional basis is $25,000 per year. If you didn’t meet this threshold in the previous 5 years, starting from the 2019/2020 financial year, you could contribute more than the threshold when adding previous years’ unused concessional contributions.
Concessional contributions include Employer Super contributions and those you claim a tax deduction for within your income tax return. Leigh says the changes will go a long way to encouraging saving for retirement in superannuation.
Super Effective Retirement Saving Strategy
“Superannuation is a tax-effective vehicle for retirement planning, and the introduction of the carry forward rule will mean that more people will have the opportunity to invest for their retirement in years where financially they are better positioned, instead of missing out in years they are not.”
*Leigh Johnston is a representative of FNP Solutions Pty Ltd (ABN 87 156 409 531) Trading as Vision Property & Finance Newcastle a Corporate Authorised Representative of PATRON Financial Services Pty Ltd ABN 12 122 381 908 AFSL 307379.