For all those clients who had a strategy of contributing to superannuation the maximum amount allowed and then take a pension out of their super fund, the window of the benefits of this strategy is about to cease from 1 July 2017. From 1 July 2017 the Government has changed the tax exemption allowed on the investment earnings of this type of pension – no longer will the earnings be tax free but will be taxed in the same way as an accumulation member (15%). Therefore, people should be considering whether they can meet the appropriate conditions of release to change the pension to an account based pension, which keeps the tax exemptions, or should they roll back their transition to retirement pension back to accumulation phase. Each answer will be different for each client – no single rule fits, due to different circumstances and aims in life.
We suggest all clients who already have a transition to retirement pension in place contact either Matthew Grapsas, Simon Flowers or Cathy Walley to discuss your options going forward from 1 July 2017.