Have you considered how the new super-caps rules will affect you from 1 July 2017?

By Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.

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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.

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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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Source: AMP Capital Funds Management. Author: Shane Oliver.  Important note: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.

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