Make the most of this end of financial year
If you’re aged 50 or over, this 30 June could be a financially significant one for you.
The cap for concessionally taxed super contributions is legislated to reduce from $50,000 to $25,000 pa on 1 July for people aged 50 or over.1
If you’re making concessionally taxed super contributions and using a transition to retirement pension (TRP), this change could have significant implications for you.
Your financial planner can help you make the most of the current concessional contribution (CC) cap of $50,000 in the lead up to the end of the financial year.
With retirement likely to be less than ten years away, you only have limited opportunities to make additional concessionally taxed super contributions and maximise your tax-free income when you are no longer working.
What about after 1 July?
You may need to review and possibly reduce your concessionally taxed super contributions. If you exceed the CC cap, you could end up paying excess contributions tax of 31.5% in addition to the 15% contributions tax, totalling 46.5%.
This may also mean reducing the income payments you receive from your TRP. If you decrease your super contributions but continue to receive the same TTR income payments, you could end up with more income than you need, which would be taxable under age 60.
You may even need to stop your TRP and start a new one with a lower account balance to avoid receiving surplus taxable income.
Your financial planner can review your retirement plans to make sure you maximise your opportunities, without incurring an unnecessary tax bill.
1 The proposal for retaining the higher CC cap for people age 50 or over with less than $500,000 in super has been deferred to 1 July 2014.