Impending retirees advised to wait
The 200,000 Australians reaching retirement age this year are being urged to postpone hanging up their boots to take advantage of superannuation and tax breaks set to kick in on July 1.
High-income earners wanting to top up their superannuation prior to retiring are also being urged to refrain form making additional contributions until after June 30 when proposed reductions in the superannuation surcharge, from 14.5 to 12.5 per cent, take effect.
According toBT Financial Grouptechnical services director Kevin Smith these proposed changes, together with the annual July 1 increase in superannuation thresholds, indicate delaying retirement until next financial year may provide greater tax concessions.
“Reasonable benefit limits (the maximum amount of concession taxed benefits available from superannuation over a lifetime) are indexed annually, so high net worth individuals approaching their limit may benefit from waiting until July 1 increases take effect,” Smith says.
However delaying may not be to everyone’s advantage, with Smith saying it’s important to weigh the benefits of acting before July 1.
“Those aged between 65 and 75 may find it more difficult to make additional contributions to their superannuation next financial year due to proposed changes. In this case, they may wish to act before 30 June.
“For many Australians, superannuation will grow to be their largest asset, worth more than the family home. As superannuation potentially represents retirees ’ biggest and last pay cheque, it’s vitally important to understand the consequences around the timing of this decision,” Smith advises.
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