Potential windfall to be found in super reforms

Financial advisers are reminded of significant benefits offered by incoming superannuation reforms, with clients preparing for retirement or searching for their first home in line for the lion's share.

NAB director of SMSF and customer behaviour Gemma Dale said it's crucial consumers are aware of the super reforms expected to take effect this year, including the downsizer contribution and first home super saver scheme.

It's important to note the conditions that apply to the downsizer contribution, Dale said.

"One of the big changes this year is the downsizer contribution, which allows individuals aged 65-years plus to make non-concessional contributions of up to $300,000 per person to their super from the proceeds of selling their main residences," she said.

"But it is important to note that these contributions only apply to contracts of sale entered into from 1 July 2018, and the property also needs to be owned for at least 10 years before disposal.''

The same was said for the first home super saver scheme which will allow eligible individuals making voluntary super contributions from the beginning of the current financial year to use those additional contributions in purchasing their first home.

The voluntary contributions will be limited to $15,000 per annum, up to a total of $30,000, and count towards the relevant contribution cap.

"Eligible individuals will be able to have up to 100% of non-concessional and 85% of concessional contributions plus associated earnings withdrawn from super to purchase their first home from 1 July," Dale said.

However, consumers must be reminded this reform is yet to be legislated.

"It is important to note, that the legislation for this scheme is yet to be passed, so there is a risk any voluntary contributions made in anticipation of it could be locked into individuals' super," Dale said.

As of 1 July, superannuants with an account balance of less than $500,000 at the close of the previous financial year will be able to access a higher annual cap and contribute the remaining unused concessional contribution cap on a rolling basis for five years; though only unused amounts accrued from 1 July 2018 will be carried over.

The new measure enables those who take time out of work or work part-time to make catch-up contributions when they accumulate lumpy income or choose to return to full-time employment, Dale said.

Read more: downsizer contributionNABsuperannuationGemma Dalefinancial advicefinancial planningfirst home super save scheme
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