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Super changes may boost SMSF take-up

The wide-ranging changes to the nation’s superannuation system delivered in the federal budget will drive greater planning around saving and retirement, which could lead to more Australians seeking control and, in turn, looking to SMSFs.

While the concessional contribution (CC) cap was reduced to $25,000 a year and non-concessional contributions (NCC) would now operate under a lifetime cap of $500,000, such changes were positive for the take-up of advice, HLB Mann Judd Sydney wealth management partner Jonathan Philpot said.

“Whenever you get these sorts of changes come in where there are more limits, what that leads to is the need for greater planning,” Philpot told selfmanagedsuper.

“And once you start doing some planning, you start to want greater control.

“So I don’t see any reduction in SMSF [numbers], given that for a long time we’ve been saying that adequate SMSF balances really can start at a couple hundred thousand dollars.”

He added there was nothing to suggest those balances could not be achieved.

“In fact, we’ll probably see Australians grow their super balances sooner because people will actually have to start planning and start utilising that $25,000 CCs on an annual basis much earlier than they would’ve planned if they want to build up an adequate super balance,” he said.

“It’s a ‘use it or lose it’ balance, which could see more people engaging and turning to SMSFs for greater control.”

SuperConcepts technical services and education general manager Peter Burgess said despite the announcement of 10 significant changes to superannuation, he believed they would not affect SMSF numbers.

“Overall, I don’t think these changes will have a material impact on SMSFs in terms of the number of funds being set up,” Burgess said.

“And the reason why they set up SMSFs will remain the same – because they want more control over their investments.”

He also highlighted that the budget did not include any SMSF-specific changes in relation to superannuation.

The CC limit was previously $30,000 a year or $35,000 a year for people aged 50 and over.

The new NCC rule takes into account all contributions made since 1 July 2007 and would be applicable from the night of the budget.

The NCC limit was previously $180,000 a year, with a three-year bring-forward rule of $540,000 for those under 65.

Further, the government will reduce the income threshold above which individuals will be required to pay an additional 15 per cent tax on their CCs from the current threshold of $300,000 to $250,000, effective from 1 July 2017.

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