IMPORTANT!  2016 superannuation contributions

You have no doubt followed the media attention around the forthcoming Federal B udget and possible changes to superannuation that have been mooted . There appears to be concern in the public arena that superannuation is being used extensively by the very rich to accumulate wealth, rather than for its primary purpose of accumulating sufficient assets to provide an income stream for an individual's retirement.

The ATO has issued a statement declaring that superannuation funds should not be used for estate planning.

It is generally acknowledged that individual requirements vary but the superannuation industry's research indicates that a couple requires approximately $60,000 per annum to live comfortably in retirement, while a single individual requires around $45,000 per year (based on today's values).

Currently the Age Pension is around $20,000 per person per annum, depending on personal circumstances.

For a time there were discussions around the principle of increasing tax on funds being withdrawn from superannuation, as well as earnings being accumulated in superannuation, however current indications are that these changes are off the table at the moment.

However , there are certainly whispers among the top superannuation professionals that there may be some changes to superannuation contribution caps.

The current caps on contributions to superannuation are:

Tax-deductible contributions

Up to age 49        $30 ,000 per annum

50 and over         $35 ,000 per annum

Non-deductible contributions

$ 180,000

There is also a three year 'brought forward' provision to enable non-deductible contributions in any one year, for the current and the next two years.

This means the maximum non-deductible contribution that can be made in one year is $540,000 ($180,000 x 3 years), however further non-deductible contributions cannot be made until the three year period expires.

Anyone aged over 65 must meet the work test before contributing to superannuation.  The work test is 40 hours of paid work in a 30 day period.

Subject to meeting the work test, superannuation c ontributions can be made until 30 days after the end of the month in which a member turns 75.

In the light of the current uncertainty as to what changes may be made the superannuation system in the upcoming Federal Budget, we suggest as a matter of urgency, that you consider what contributions you wish to make to superannuation, prior to Budget Night on Tuesday 3 May 2016.

We also suggest that it would be wise to ensure that all pension payments required for the 2016 financial year are made prior to Budget Night in case unexpected changes affecting pensions are announced.