Savvy investors are rushing to make voluntary contributions to their superannuation before the new rules come into effect on July 1. Voluntary contributions to some advised funds have risen sharply in November 2016, up 25 per cent on contributions made in October, and almost 20 per cent higher than the previous November.
This surge has come about as the Federal Government passed its proposed super reforms in November, which aim to make the superannuation system fairer and more sustainable. From July 1, 2017 a number of changes will come into effect which impact the amount of certain types of contributions that a person can make before extra tax applies.
Changes to the non-concessional (after-tax) contributions rules include a reduced annual non-concessional contributions cap, from $180,000 to $100,000, for people with a total super balance of less than $1.6m. Those with total super balances of $1.6m or more on June 30, 2017 will effectively no longer be able to make further non-concessional contributions in the 2017–18 financial year, potentially making 2016–17 their last opportunity to make post-tax contributions.
Make the most of the current rules
As the lower contributions caps don’t kick in until July 1, now might be the time to consider making voluntary contributions to super if you’re in a position to do so. It’s important to seek advice as the rules are complex and there are penalties if you go over the contributions caps. That’s why you should speak with your adviser, who can review your situation and build a strategy to help you get the most out of your super.