Whats in the Federal Budget for SMSFs?
Fortunately nothing major with most of the changes having already been flagged by the media. Having said that there are a number of items that will impact some people which are not directly in relation to superannuation and we encourage you to read on…
Social Security Income Test – Defined Benefit Pensions
For individuals who are in receipt of a Defined Benefit pension, from 1 January 2016 a maximum of 10% of actual pension payments will be excluded from assessment.
Social Security Asset Test
These changes are not specific to SMSF.
There have been two changes that will take effect from 1 January 2017:
- The assets test thresholds have been increased with the Non-homeowners asset test increased to $200,000 above the homeowner asset test threshold
- The taper rate for this test has been increased from $1.50 to $3 per $1,000 worth of assets
The effect of the changes are the Pension cuts out at $547,000 of assessable assets for Single homeowners and $823,000 for a Couple who are homeowners.
Terminal Medical Condition
Currently, you can access your preserved super if 2 conditions are met:
- 2 registered medical practitioners have certified the individual is likely to die within 12 mths from an illness or injury; and
- At least one of the registered medical practitioners is a specialist practicing in an area related to the individual’s illness or injury.
The Government has proposed extending this period to 24 months.
The effect is terminally ill clients can access their benefits even while working and can be paid in the form of a lump sum or pension up to the total balance in their super account. If paid as a lump sum it is tax-free.
What if the individual doesn’t die within the 24-month certified period?
There is no requirement to pay back any benefits and the super balance will still be treated as “non-preserved”. However, the tax-free status for lump sums ceases and are subject to the normal payment rules.
Increase in Penalty Units
There has been an increase in the fine for administrative penalty units issued by the regulator from $170 to $180 per penalty unit.
Aaron McCracken is an Authorised Representative of Count Wealth Accountants, AFSL Number 227232. Any information provided is of a general nature and does not purport to make any recommendation upon which you may reasonably rely without taking specific advice.
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