Legislative Updates and Implications – Super and Pensions
Posted on 03 March, 2017
The Fair and Sustainable Superannuation Bill and Excess Transfer Balance Tax Bill legislation which passed in November 2016, introduce the 1 July 2017 changes to superannuation.
It is important for SMSF trustees and their advisers to review investment and contribution strategies before the end of this Financial Year to make any changes necessary. In particular, consideration should be given to:
- Whether to continue any transition-to-retirement pensions.
- Ensuring pension balances do not exceed the $1.6 million cap.
- If existing pension balances exceed $1.6 million, deciding whether to reset the capital gains tax cost base.
- Maximising the level of contributions in the current financial year.
- Winding up anti-detriment reserves.
- Implementing splitting where couples have unequal balances, particularly if the $1.6 million cap may be a problem.
Legislative changes that effect entitlements to age pensions became effective from 1 January 2017:
- The assets test taper rate, for assets over the lower threshold increased from $1.50 to $3. This significantly reduced the cut-off thresholds.
- If moving to residential care after 31 December 2016, the rental income from the former home is counted as assessable income under the income test. In addition, these clients remain assessed as homeowners for only the first two years in care. At the end of two years they switch to non-homeowner status and the market value of the home becomes an assessable asset.
If you lost access to the age pension on 1 January 2017 due to the changes, you should have automatically been issued with a non-means tested Commonwealth Seniors Card.
Source: Self Managed Super Magazine