For many of us, Superannuation is the second largest investment we have after the family home. With the recent changes post 1st of July 2014 we have even more reason to make sure we regularly review both the level of contributions and our investment strategy to ensure we are making the most of this investment. Recent changes to contribution levels commenced on the 1st of July this year, below we summarise these.
The Changes in Summary
The concessional contribution cap for individuals under age 50 increases to $30,000 pa as part of indexation. The concessional contribution cap for individuals over age 50 (including those who are age 49 as at 30 June 2014) will be $35,000 pa. The non-concessional contribution cap will index to $180,000 pa (6 x the lower concessional contribution cap). The non-concessional 3-year averaging threshold will therefore index to $540,000 (3 x $180,000). The SGC rate will increase to 9.5% from the current 9.25%.
Managing the Concessional Contribution Cap from 1 July 2014
Concessional contributions include employer Super Guarantee (SG) contributions, salary sacrificed contributions and personal, deductible contributions (eg selfemployed individuals). With the increase in the SGC rate from 1 July to 9.5% from 9.25% current superannuation contribution arrangements will need to be reviewed and adjusted accordingly if the individual does not want to exceed the concessional contribution cap according to their age for the new financial year 2014/15.
The good news is that the concessional contribution cap also increases; to $30,000 for those under age 50, or to $35,000 for those age 49 and older as at 30 June 2014. This could mean an individual could actually increase their overall contributions into super.
It is important that before you undertake strategies to boost your super that you speak to your financial adviser to ensure these contributions are appropriate for your circumstances.
Disclaimer: This report was prepared by Kai Hansen Authorised Representative of Morgans Financial Limited (ABN 49 010 669 726 / AFSL 235410). This report is General Advice only and is made without consideration of any specific client’s investment objectives, financial situation or needs. It is recommended that any persons who wish to act upon this report consult with their investment adviser before doing so.