Media missed good news on super
There were many positives for superannuation in the 2016 Federal Budget that were missed in media coverage, and super remains a tax-effective savings vehicle for retirement, according to Findex.
The financial advisory and accounting services group's advice standards manager, Braith Morrow, said the media's coverage of the unpopular changes to super had drowned out the positive changes to super.
"The fact individuals will have the ability to make contributions to superannuation up until they turn age 75 without having to meet the existing work test is welcomed," Morrow said.
"A reduced concessional contribution cap of $25,000 will apply and, consequently, people who still have forms of passive income in their retirement (such as from rental properties) could benefit by maximising their tax efficiency without having to be employed."
Morrow was also pleased the Government had extended the existing tax exemption on earnings to products such as deferred lifetime annuities and group self-annuitisation products.
He added that this was the result of the Government's final report into the Retirement Income Streams Review that began in 2014, which expressed concerns about longevity risk where individuals would outlive their savings in retirement.
Furthermore, if an individual's marginal tax rate is above the superannuation earnings tax rate of 15 per cent, it remains tax-effective through structuring accumulation of wealth in a concessionally-taxed environment.
"Upon reaching retirement, an individual can continue to enjoy tax-free earnings on up to $1.6 million of assets (indexed)," Morrow said.
"Given that presently no rule exists to force a compulsory cashing out of accrued benefits above this cap, then superannuation still looks good if your marginal tax rate sits above 15 per cent."
AUTHOR
Malavika Santhebennur
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