Make the most of your SMSF cash allocation
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Make the most of your SMSF cash allocation

Make the most of your SMSF cash allocation – while dealing with the Governments super changes

Are you aware of the Government’s super changes? 

There’s no doubt that superannuation can be a confusing topic – and the government has certainly not helped that confusion with the way it has handled the latest changes to the super contribution rules.

Concessional contributions
From 1 July 2017, the amount of concessional (before-tax) contributions a person can make to their super in a year will be $25,000. However, people with less than $500,000 in their super accounts will be allowed to make catch-up concessional contributions from 1 July 2018. Read more about concessional contributions

Non-concessional contributions 
The non-concessional contribution cap will reduce from $180,000 to $100,000 per year. Non concessional contributions are your own personal contributions which you aren’t able to claim a tax deduction for.

The other constraint is that if your total superannuation balance is over $1,600,000, you won’t be able to make a non-concessional contribution at all. These new rules apply from 1 July 2017. Super balances will be measured each 30th June (ie your balance at 30 June 17 will determine whether you can make a non-concessional contribution in 2017/18).

With the change in the non-concessional cap to $100,000, the limit under the “bring forward” rule, which allows people under 65 during the financial year to make up to three years’ worth of non-concessional contributions in one year, will fall from $540,000 to $300,000.In cases where your super balance is between $1.4m and $1.6m, it will only be $200,000.

How to make the most of the changes

Notwithstanding the government’s changes, you can access the prevailing higher caps until the end of this financial year. So, if you want to get a large amount into super, do it before 30 June 2017. And as the limits apply per person, if you have a partner, then you could possibly get up to $1,080,000 in super through non-concessional contributions. From 1 July 2017, this will only be $600,000.

All of these changes apply to self-managed super funds (SMSFs) too.

As you move funds into your SMSF, make sure that you’re maximising the returns on offer – don’t just settle for leaving cash in your transaction account. A RaboDirect High Interest Savings account is a great way to maximise interest earnings on funds that you may need at any time. If you’re looking to hold more cash in your SMSF while you decide what to do with your contributions, the RaboDirect Notice Saver account is designed for SMSF cash where immediate access is not required: you notify the bank about withdrawals in advance in return for a higher rate of interest. A longer notice period is rewarded with a higher rate of interest.

In the next article, we’ll look at the government’s changes to the amounts SMSF members can have in pension-phase accounts – where earnings on the assets are untaxed – and Transition to Retirement pensions (TRIPs).

This article originally appeared in Switzer Daily. Switzer Daily is a business, finance and political commentary website founded by Peter Switzer. Their website has been designed to cut through the clutter that exists in business and financial media and provide their readers with the information they require to make the right decisions in relation to their shares, superannuation, property, business, career, bank account, family and life.View the original article on Switzer Daily.


Disclaimer: The views expressed, and any advice given, in the above article are those of the author, and do not necessarily reflect the views of RaboDirect. We recommend that you seek professional advice before making any decisions relating to the matters discussed in the article.

Note: Have you noticed a change in our name? That’s because we recently changed from RaboDirect to Rabobank. Of course, you will continue to experience our great service and award winning savings products under the Rabobank name, however you may see mentions of RaboDirect in our blogs published prior to April 2019. If you have any questions please reach out to our Online Savings team.

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