By Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.
Less can go into your super from 1 July 2017
Super can be a tax-effective way to invest, depending on your circumstances. But with the current NCC caps set to reduce by about 45% from 1 July 2017, the ability to benefit from tax concessions that super provides will be reduced.
From 1 July 2017, you’ll only be permitted to contribute $100,000 in after-tax dollars per year rather than the $180,000 you can right now.
Could you boost your super by up to $540,000?
If you’re under 65, you may be eligible to contribute up to three years’ worth of non-concessional contributions if you act before 1 July 2017. That means you could add up to $540,000 to your super nest egg.
After 1 July 2017, you’ll be limited to an annual amount of $100,000 (or up to $300,000 if you’re eligible to use the bring-forward rule and add three years’ worth of contributions at once). I can help you work out exactly how much you can still contribute depending on your circumstances and any previous contributions you may have made.
The new balance-limit
There is also another change in the rules that may affect you. If the total amount you hold in super exceeds $1.6 million, you won’t be allowed to make further non-concessional contributions without financial penalty after 30 June 2017.
The new $1.6 million balance-limit could affect you when you retire and want to draw an income from your super via a pension too.
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