The new superannuation legislation flew through both houses of Parliament so quickly that I expect most people are still catching their breath about their scale rather than focusing on what next.
But there are some important things to be thinking about right now if you are affected by the changes or advising people who are. Here are just six.
Urgent Step #1
Get across details of any defined benefit or market linked (term allocated) pensions in place including outside the SMSF. The treatment of these is strange to say the least. Most importantly, even a defined benefit pension from (say) a corporate or government scheme which feels totally unrelated to the SMSF will affect action taken in the SMSF between now and 1 July 2017.
Urgent Step #2
Those with large balances (above $1.6m) should be seriously thinking about making a $540k non-concessional contribution this year if they can as it may be the last time they can do so. The new rules will prevent any non-concessional contributions for those with more than $1.6m in super and even those with less will find their limits constrained from 2017/18 onwards.
Urgent Step #3
Think carefully, very carefully, before making a contribution to a fund that is currently entirely in pension phase. This can compromise the Fund’s ability to get the most out of some special rules about grandfathering capital gains built up before 30 June 2017.
Urgent Step #4
Lodge the 2015/16 income tax return on time. Some important “once off” irrevocable decisions about CGT relief need to be made before the 2016/17 return is due. A late lodgement this year could mean the lodgement date for 2016/17 is brought forward – leaving clients with less time to make those important decisions.
Urgent Step #5
Think carefully about whether someone with a transition to retirement pension has actually already met a “retirement” condition of release and the pension is no longer a transition to retirement pension. Remember that someone over 60 who takes a temporary paid job is retired when they end that job. This will make a profound difference to the tax paid by the SMSF in 2017/18 when transition to retirement pensions lose their general tax exemption on investment earnings.
Urgent Step #6
(Not entirely tongue in cheek!) Register for our December training events. Of course I believe my own propaganda but I do believe that as these are the biggest super changes in 10 years, it is absolutely critical that advisers and accountants working in SMSFs get up to speed as quickly as possible. Our training events in early December are essential. See details here. Those of us who were around in 2006/07 remember that preparing for the 1 July 2007 changes absorbed the entire year (and curiously a major component of the legislation for those changes was ALSO passed in December!). The earlier we get started the better.