And this is the problem. I'm getting close to my 500K limit. I have no chance of getting concessional contributions as I stopped working a long time ago. Then I sold our investment property just over a year ago. The funds from that was earmarked for Super. Now I can't put it in because someone overnight had a brain fart and made it effective immediately, talk about going backwards. They really don't think these things through do they?
And this is the problem. I'm getting close to my 500K limit. I have no chance of getting concessional contributions as I stopped working a long time ago. Then I sold our investment property just over a year ago. The funds from that was earmarked for Super. Now I can't put it in because someone overnight had a brain fart and made it effective immediately, talk about going backwards. They really don't think these things through do they?
I suspect the boffins do think these things through to a large extent which is why the guillotine on the 500k non-deductible contribution was made effective from 7:30 pm on 3 May, yet other initiatives are proposed to be introduced at a later date. It has had the unfortunate effect of preventing some "smaller" players implementing their plan but I'm guessing it was done to prevent larger fish taking advantage.
Some of those dudes in Finance and Treasury are not the shallow thinkers many would like to believe.
I don't think they're shallow or unintelligent....just a bit rushed and i suspect they could do better with more time and more collaboration.
Fair point. Possibly was also an attempt to avoid spreading the word through leaks which I believe has happened in the past.
I've never dealt with them and only met a couple at private social gatherings. Their level of conversation was enough to scare me into chatting about the weather and cricket (ex-public servant but my saving grace was I was only carried the bags and completely cashed out my super and rolled it into the SMSF - the taxpayer had funded me more than enough to shame me from taking a pension).
You sound similar to me, once I looked into it, the depth their counter moves go to is scary.
I did the same as you and rolled over into SMSF.
They would have covered all this through the "white paper", to think they haven't thought it through, is a mistake.:cry
One issue I was thinking about, was what happens if you are over the $1.6m threshold, and are over 60 in pension mode.
The money which you must remove, is it removed tax free, or is it removed with tax payable on the taxable component.
Where an individual accumulates amounts in excess of $1.6 million, they will be able to maintain this excess amount in an accumulation phase account (where earnings will be taxed at the concessional rate of 15 per cent). Members already in the retirement phase with balances above $1.6 million will be required to reduce their retirement balance to $1.6 million by 1 July 2017. Excess balances for these members may be converted to superannuation accumulation phase accounts.
A tax on amounts that are transferred in excess of the $1.6 million cap (including
earnings on these excess transferred amounts) will be applied, similar to the tax
treatment that applies to excess non-concessional contributions.
That's from the Budget papers. I'm no expert but I suppose it will depend on whether the excess is a tax-free component or not.
Yeah, they've thought it through. I'm pretty sure of that now.
As this aspect hasn't been enacted retrospectively, why couldn't someone over 60 in pension phase, just remove the excess now as a tax free withdrawal?
If I were in such a situation it's what I'd do. Random thought: Is that what is actually intended?
Could also be some fascinating unwinding of property if that is in some SMSF's.
Gee it's gonna be fun watching.
As this aspect hasn't been enacted retrospectively, why couldn't someone over 60 in pension phase, just remove the excess now as a tax free withdrawal?
Because it will be tax-free after the change as well.
Is that right, thanks for that McLovin, I knew one of you gurus would know the answer.
I can sleep easy, and tell my husband not to worry.
You guys crack me up, enough humour for today.
I just thought, maybe I had better show my feminine side.
Myself and the other half rode over to the major shopping mall today, about 10k's, when we alighted her bike was stolen.
Jeez she was pi$$ed with the walk home. The bikes were locked with a 10mm stainless braid cable and number lock.
Cut clean as a whistle.
Just shows the needy can afford good quality tools, what a wonderful country, our future in their hands.lol
In general I like the changes and they are fair, except for the retrospective nature of the lifetime cap.
There are a number of people out there who plan to retire within say, 5 years, who were planning on using the $180k pa and $540k cap to boost their super at the last moment. People in this situation include self-employed with low super balance, and widows who typically raised kids in the 80s/90s and therefore did not accumulate much of a balance. I use these examples because I personally know many in this position.
These people would be using funds from an inheritance, sale of small business, sale of investment property, or downsizing of the family home to boost their super just in time for retirement.
Having the rules changed so radically at the last moment, has stuffed up the planning for a few people.
So to say that $1.6mill is a reasonable amount to have in super, but only allow $500,000 to be contributed is unfair. The $500k cap is plenty for younger folk who will have SG and concessional contributions every year until retirement, and it's plenty for a couple who can double that cap, but it's not enough for a single person in the situation I've described.
Labour will (and have already) pounce on this aspect of it, and I predict it will be amended to include either a higher lifetime cap, or a transitional arrangement for those over 50.
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