The laws are very complex, far reaching, and have to be complied with.
Business operators (and their key staff) will have their retirement strategies affected by the new legislation that is now law. Each superannuation member will need to review their strategies to ensure they are ready before 1 July 2017.
Some key points to consider include:
Superannuation funds that paid pensions up until 30 June pay NO TAX. This is no longer always the case.
Superannuation Pensions are now limited to a maximum balance of $1,600,000 (called the Transfer Balance Cap). As a result of this, many Superfunds that have not paid tax for many years will now have to. You will need to consider whether to leave money in Superannuation, or pay it out of the fund.
People who are seeking to put more of their own money (or an inheritance or asset sale proceeds) into Superannuation may not be able to (once they get close to the $1,600,000). So people who were planning to build a large Superannuation balance over the next few years may not be able to do so. Other options may need to be explored.
If your Superannuation Fund has capital gains on an asset it holds, these gains could not be subject to income tax (when they would not have been before). Each individual asset will need to be reviewed, and strategy options considered, to ensure you do not pay more tax than you need to.
Many people (not just the wealthy or high income earners) have been utilising a clever strategy of salary sacrifice, while taking a pension from their Superannuation (called a transition to retirement pension). These strategies WILL NOT be as effective after 1 July 2017, so they should be reviewed now and adapted. It could actually cost some people money to continue with these strategies.
Many people have insurance inside their Superannuation as it can be a very tax effective strategy. The new laws could have a very significant impact on this strategy, and it should be reviewed, as will your Estate Plan. How you were going to deal with Superannuation upon your passing, may not be the best way. This again should be reviewed.
As you can see, the new Superannuation rules will have significant impact of not just those with a large Superannuation balance.
Click the link below to download a summary of the Superannuation changes