New year, new limits for super

At midnight last night, clocks were reset on a new financial year. A fresh start for us all, with one period of time ruled off.

Not so much a fresh start for Greece. Europe has a little more time up its sleeve to consider whether to head for the Grexit or not.

For readers focused on their superannuation, a new set of numbers rolled into play last night. And getting a handle on them is going to be important for many.

The main numbers haven't changed this year. The concessional contribution (CC) limit for the under 50s is still $30,000. If you're turning 50 this year, then you've got $35,000 to snaffle into super, if you can.

The over-50s $35,000 limit isn't currently indexed, so will eventually be caught by the lower CC limit and will cease to be an advantage.

Similarly, non-concessional contributions, which increased last year from $150,000 to $180,000, have not moved. They are tied to six times the lower CC limit. And the three-year pull forward rule, therefore, still allows you to get $540,000 into super to cover you for, say, FY16, FY17 and FY18.

(And if you managed, as a team, to get $180,000 each into super before 30 June as NCCs, you can now put in another $540,000 each, making a total NCC contribution of $1.44m into your SMSF in the space of a couple of days for a couple.)

But there are plenty of limits that are shifting and lifting.

The “maximums contributions base” is increasing from $49,430 a quarter to $50,810 a quarter. That's the equivalent of moving from an annual salary of $197,720 to $203,240.

The maximum contributions base is the limit above which employers aren't required to pay Superannuation Guarantee contributions. Once your salary tops that figure, SG payments are not required. A large number of employers will continue to pay SG above that amount, but they don't have to.

This limit started at $20,000 in 1992.

The Low Rate Cap amount is also shifting higher, from $185,000 to $195,000. This is the rate for superannuation lump sum payments that receives a concessional rate of tax.

And while it has been neutered to a degree (at one stage, it was as high as $1500), there is still the $500 co-contribution. The rate at which that can be paid has a lower threshold that has been lifted to $35,454, with a higher-end threshold of $50,454.

This is for the $1000 non-concessional contribution that you can make to your super fund, with the government co-contribution top-up. If you earn less than the low-income threshold, your $1000 will be matched by $500 from the government, direct into your super fund.

While these rates have all been set in recent months, there is one change that was legislated decades ago that kicks into force today.

If you turn 55 today, happy birthday! But your cake won't taste as sweet as one for someone who had already turned 55 yesterday or earlier.

You're probably aware that you are part of the first group that can no longer begin to access their super from their 55th birthday.

If you turned 55 yesterday, your preservation age was 55. But from today, the preservation age starts to lift, from 55 to 60 (60 is the preservation age for everyone born after 1 July 1964).

There's also the “lifetime CGT cap”, which applies to contributions that can be made to super by those small business people who have sold an active asset. Essentially, capital proceeds from the sale of a business that qualify for the 15-year exemption or the $500,000 retirement exemption. This limit is being lifted from $1.355m to $1.395m.

Adjusting your super contributions

At this time of year, if you haven't done so already, you should be making adjustments to your contributions plans.

This is particularly important for those with salary sacrifice arrangements who are trying to juggle Superannuation Guarantee contributions with salary sacrifice and trying to get as close as possible to the maximum CC limit of $30,000 or $35,000.

If you've had a salary increase, or are likely to during the year, then you should be constantly aware of and monitoring this.

For those who like to take advantage of markets while they're beaten up, have you considered having more of your super contributions made earlier in the year, as in now, so that you can invest in some markets that have recently taken a beating?

The information contained in this column should be treated as general advice only. It has not taken anyone's specific circumstances into account. If you are considering a strategy such as those mentioned here, you are strongly advised to consult your adviser/s, as some of the strategies used in these columns are extremely complex and require high-level technical compliance.

Bruce Brammall is managing director of Bruce Brammall Financial. E: bruce@brucebrammallfinancial.com.au . Bruce's new book, Mortgages Made Easy, is available now.