Key Superannuation Changes for July 2017: Contribution Rules
In our previous post, we highlighted key superannuation changes due to come into effect on 1 July 2017. This post continues the series by looking at changes to the contribution rules.
Much like the period leading up to 2007, there is now a once-off contribution opportunity which disappears, in this instance on 1 July 2017.
The opportunity is to make contributions under the existing rules, importantly the $180,000 per annum per person non-concessional contribution cap, which (by using the bring-forward rule) can allow up to $540,000 per person.
The rules change on 1 July. From July no contributions (other than concessional) will be permitted for a person with accumulated superannuation of $1.6 million. For those with less than $1.6 million up to $100,000 per annum (plus potentially using the next two years under the bring forward rule) can be contributed.
Accordingly, whether to make contributions before July needs to be considered in good time.
Many clients may wish to contribute assets, as long as the SIS rules allow the Fund to acquire them. Often property used in a business (including farming) is contributed, and in those circumstances the contributions are effected by the transfer documentation.
Contributions are made as set out in the documents, which will therefore specify the date of transfer, and other aspects, such as how GST is dealt with if necessary.
In addition a contribution cannot be effected if there is a fundamental impediment to the fund acquiring ownership, for example, a mortgage on the property.
Often a transfer will not be of the entire property, or effect both a contribution (as to a % of the property) and also a sale (as to a %).
Many such transfers can be brought within a concession for nominal transfer duty ($20), and (particularly if used in the client’s business) without much, if any, capital gains tax cost.
As the additional contribution limits under the small business CGT concessions in Division 152 are continuing without amendment, thought must be given to the order of contributions and, if there is a choice of properties to transfer, which one, and at what times.
Property transfers therefore need to be considered in good time so that documentation and action can be completed by 30 June.
In discussing contributions with clients, the licensing requirements need to be met.
In this regard ASIC has recently issued some guidance on accountants giving advice, in a release entitled “AFS Licensing Requirements for Accountants who provide SMSF Services”.
If you require any assistance, please contact us.