How the Budget and upcoming changes may affect you, your family, and our clients.
Don’t worry, I am not going to regurgitate a breakdown of the Federal Budget, you can all Google that from a thousand sources. What I want to highlight is the value of proactive ongoing advice in the face of consistent change. The following are changes that need consideration for our client community.
Downsizing: Selling your home and aged 60+? You can now get up to $300,000 into superannuation, boosting your tax-effective income stream. Previously eligibility was 65 and over.
Removal of the Work Test: Those aged 67-74 will no longer need to meet the 40-hour in 30 days work test to be eligible to make deductible or non-concessional contributions. This could be helpful if you sell an asset or property with large capital gains.
Employer Superannuation Guarantee Contribution (SGC): Employer super contributions will again be on the rise, from 9.5% to 10%.
Catch-Up Contribution: Individuals can carry forward unused concessional contributions to super for 5 years – another great strategy to reduce your taxable income and save for retirement. Your super balance must be less than $500,000.
First Home-Owner Super Saver Scheme: If your kids are saving for their first home, this is a no-brainer. All they need to do is place voluntary (salary-sacrifice) contributions into their super. Currently, up to $15,000 a year can be contributed, and the 2021 budget proposes to increase the maximum withdrawal from $30,000 to $50,000.
Super Contributions Caps Increase: Although not in the budget, these changes come into effect on 1 July 2021. Concessional Contributions increase from $25,000 to $27,500 and Non-Concessional Contributions increase from $100,000 to $110,000, or $330,000 using the bring-forward rule.
Also, in the budget are changes to Child Care, Aged Care, Australian Tax Residency rules, Employee Share Schemes, Business Tax Incentives, Individual Tax, and more.
Needless to say, this is where the value of proactive ongoing advice adds significant value to our clients’ lives. If you would like to discuss any of these changes, please contact our office today.
Stephen Lowry (CFP® Professional, DFP, AIF®) is a representative of Alman Partners Pty Ltd, Australian Financial Services Licence No: 222107.
Note: This material is provided for information only. No account has been taken of the objectives, financial situation or needs of any particular person or entity. Accordingly, to the extent that this material may constitute general financial product advice, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. This is not an offer or recommendation to buy or sell securities or other financial products, nor a solicitation for deposits or other business, whether directly or indirectly.