If you have a spouse and have (or are likely to have) more than $1.6 million in super, there are things you can do to improve your situation when you retire.
The $1.6 million cap
From 1 July 2017, there is a limit on how much super you can transfer to ‘retirement phase’ during your lifetime, where no tax will be payable on investment earnings.
This limit is known as the ‘transfer balance cap’ and in 2017/18 it’s $1.6 million. This cap will be indexed in $100,000 increments in line with the Consumer Price Index.
Split concessional contributions
If you or your spouse are likely to exceed this limit, you may want to consider trying to ‘equalise’ your super benefits in the lead up to retirement.
One approach to consider is to split up to 85% of your previous financial year’s concessional contributions with your less superannuated spouse.
Concessional contributions include super guarantee, salary sacrifice and personal deductible contributions, as well as certain other amounts.
Another option to consider, if you have reached your ‘preservation age’1 and are permanently retired (or meet another ‘condition of release’), is to cash-out a portion of your super and arrange for the money to be contributed into your spouse’s super account.
Furthermore, if you make the contribution into your spouse’s super account and your spouse earns less than $40,000 pa, you may be eligible for a tax offset of up to $540.
Alternatively, if your spouse makes a personal non-concessional contribution into their own super account and earns less than $51,813 pa, they may be eligible for a Government co-contribution of up to $500.
Get the right advice
A skilled financial adviser can help you get your finances in order and help you decide on the strategies that work best for you to achieve both your investment planning & lifestyle goals.
To find out more, contact us and speak with one of our qualified financial advisers.
1 Preservation age is 55 for those born before 1 July 1960 and gradually increases to 60, depending on your date of birth.