Planning for your retirement just got a lot trickier and harder with the Government’s May budget announcement stirring up confusion for many retirees especially when it comes to how much they tuck ‘after-tax’ monies into super. Subject to legislation, many proposed changes do not come into effect until 2017 but others such as the ‘$500,000 Lifetime Cap on Non-Concessional Contributions’ requires immediate attention.
Here’s a Frequently Asked Question (FAQs) on the $500,000 Lifetime Cap on Non-Concessional Contributions extracted from the Australian Budget website.*
On May 3 2016, the Government introduced a $500,000 lifetime cap on non-concessional contributions taking into account all non-concessional contributions made since July 2007. The cap will apply to individuals aged up to 75, and will be indexed in $50,000 increments in line with wages.
Is the $500,000 cap retrospective?
What do I do if I’m unsure whether I have $500,000 in non-concessional contributions?
If I have made more than $500,000 of non-concessional contributions before budget, do I need to remove the excess contributions from my super account?
What happens if I make a contribution after Budget night that takes me over the non-concessional cap?
What about small business people? Do they still get the additional CGT cap?
End of Q & A extraction.
The key message to take out: You need to be on ‘top of things‘ with your super, and ensure you monitor your contributions to not exceed the limit. When it comes to making any super decisions, best to check-in with your adviser before rather than after to avoid any unwanted consequences.
*Sourced from the Australian Budget 2016-17 website (www.budget.gov.au)
** Subject to legislation & election results.
Related Previous Article: Budget 2016 Update: Big Changes to Super & more
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