It’s that time of year again when accountants and economists go into speculation overdrive as 2016 Budget Night approaches. Journalists are busy asking government ministers to rule things in or out and social media is full of “Act now or lose out!” headlines.

Superannuation is once again at the forefront of the rumour mill and not surprisingly, worried clients are contacting us asking whether they need to make any rushed decisions before May.

What are clients’ concerns?

Putting money in:

• Will the concessional/non-concessional contributions limits be reduced? Would this apply from budget night or 1 July 2016?
• Could there be any changes to the 3 year bring forward rule; and what if I have already triggered it?
• Will re-contribution strategies be banned?

Taking money out:

• Changes to account-based pensions? Will transition to retirement pensions be abolished?
• If I was thinking of starting one should I do it before budget night?
• Should I take my minimum pension prior to budget night?

Other worries:

• Higher rates of tax on concessional contributions for high income earners.
• A cap on the amount of pension income eligible for tax exemption.

Our Opinion

We continue to give our clients the same two pieces of advice every budget season:

1. Continue to act on the basis that the current law will remain the current law.

1. If appropriate and achievable, before budget night, finalise any actions you were planning to do before 30 June 2016.

Should you take any action?

History shows that Governments do not usually backdate changes in policy to arrangements already in effect. It is also practically difficult to change contributions limits mid-year.

There are, however, some practical things clients could do before the budget to minimise risk of adverse budget changes.

The following checklist may be useful to run through with concerned clients:

Pre-Budget Superannuation Checklist

Consider actioning pre-budget:

• Planned yearly CC / NCC super contributions
• Triggering three year bring forward NCC threshold
• Making minimum income stream payment
• Executing documentation for planned new account based pensions
• Starting a transition to retirement income stream
• Re-contribution strategies

As always, we’re here and happy to help. Just give us a call on 1300 TRISUP if you would like any further information or to discuss a specific client situation.