When the 2016 Budget was handed down, there was a lot of focus on the superannuation reforms that it contained (let's face it, there wasn't much else in it to focus on!). And while there was a lot made of how the reforms may affect people in a negative manner, it may have escaped mention that there are some reforms that actually be of benefit to some of us.
For instance, if you have a low superannuation balance, you may find some of the reforms are tailored for you.
As you are no doubt aware, there are limits to what you can contribute into your superannuation account each year and there are penalties for exceeding these limits. If you have had broken work patterns, such as periods of unemployment due to retrenchment or maternity leave, these reforms will give you an opportunity to 'catch up' your concessional superannuation contributions.
If your superannuation balance is less than $500,000 on 1 July 2018, you will be permitted to rollover your unused superannuation caps for up to five years. This gives you the opportunity to increase your super significantly over this time without attracting the penalties you might normally incur.
If you earn less than $37,000 per annum, a new offset will apply that will refund to you any tax paid on your superannuation contributions. This may result in more money in your pocket come tax time!
At the moment, you are able to claim a tax offset of up to $540 on contributions you make to your spouse's superannuation account if they earn less than $10,800. The new reforms will increase their earning limit to $40,000. So while it doesn't affect your bottom line tax-wise today, this reform is designed to increase the superannuation balance of your spouse who may be earning significantly less than you. In the long term, both you and your spouse will benefit from having more money saved in superannuation.
It is worth remembering that we are still waiting for these reforms to pass through parliament in order for them to take effect, but if you would like more information regarding them or have any other superannuation related query, Stone Accountants & Advisors is a great place to start.
Not only are we small business specialists, but we are also experts in superannuation and taxation. Give us a call on (03) 9870 7247 or drop us an email at firstname.lastname@example.org for more information.