Retirees May Face New Super Burden

The head of one of NSW’s leading independent chartered accounting firms has warned that older Australian’s will need to do their sums and be prepared to accept new burden’s when it comes to recently announced superannuation changes.

The changes, broadcast as part of the Federal Government’s 2017-18 Budget speech include measures such as contributions of $300,000 by over 65’s from sale proceeds of their home into super.

However effective July 1, a cap of $1.6 million will also be imposed on the amount of super that can be transferred into the so-called ‘retirement phase’.

This means self-funded retirees with more than $1.6 million in super pension accounts as at 30 June 2017, will effectively have to remove the excess super benefits, which may result in some retirees needing to monitor two lifetime superannuation amounts.

While it’s clear the Federal Government plans favour those on low incomes, the changes for those who have substantial savings in superannuation has angered many, according to principal of one of NSW’s leading independent chartering accounting firms, Alan McGillivray.

Mr McGillivray, who has served on numerous National Tax Committees and National and State Committees of the Institute of Chartered Accountants, said this week that both The Prime Minister and Treasurer needed to be aware of the concerns being raised by many self-funded retirees, who may now have to keep their assets in a separate accumulation account that will be taxed at 15 per cent from the first dollar of income.

“The Coalition government claim very few Australians will be affected, Mr McGillivray said, but I’m already aware of cases where self funded retirees are facing significant capital gains tax to sell assets to move into superannuation.

“ The announced changes will certainly hit people who may have been planning to put extra in super in the lead-up to June 30.”

Mr McGillivray also cited the removal of tax exemptions on earnings to Transition to Retirement (TTR) income streams as being an area of disquiet, suggesting that if individuals fail to adequately reassess their financial situation, they could pay additional taxes on superannuation savings.

 “Because of this, TTR income streams could well be a less attractive option for some.

“ While the announced are design to improve the sustainability, of Australia's super system it will also add an additional burden onto many retirees.”

Mr McGillivray said that it was important retirees consider seeking independent financial advice prior to June 30 to ensure they’re aware of how the changes to Federal Government policy will affect them.