Save the Date

Who’s excited?? Budget night is fast approaching and it’s that time again where the all-powerful politicians decide the fate of us all through some tweaks or even major changes to the rules that this great land is governed by. So what’s in store this year – unlike every other year, there haven’t been too many early leaks which is making some economists, financial planners, accountants and other professionals very concerned.

While there has been talk of leaving the superannuation system alone for a while, it inevitably gets a change here and there and this year there is discussion about the possibility of movements on the contributions caps. This may indicate a reduction in the amount that you can contribute to super. There is also speculation around the taxation treatment of some contributions in or payments on the way out but nothing solid as yet; as any TV lawyer would say “its hearsay”.

There has also been speculation around the Transition to Retirement (TTR) pension. This pension was introduced to allow older Australians transition into retirement by reducing work hours without reducing income however there was a loop hole which allowed everyday working Australians over age 55 to utilise a strategy of cycling the money through super and receive a pension to gain a tax deduction meaning more money for you and less for the tax office. While this strategy has been known by the Government for a number of years, they have never done anything about this loop hole until now. And the whispers are that they may stop TTR pensions all together from budget night or at least for those who have not reduced their working hours.

These are not the only measures being discussed or those that will affect all Australian but just a quick example of items on the agenda. Budget night will also bring surprises in relation to tax, child care assistance, health, housing, Centrelink assistance, and much, much more. While many don’t take much notice of Budget night, almost all Australians will be affected by its outcomes.

Budget night is usually the 2nd week in May however with talk of a double dissolution election in July, budget night has been moved a week earlier – now May 3. In addition, previous history has shown us that some Budget night announcements take effect from when the Treasurer addresses Parliament at 7.30pm (AEST). Retrospective legislation has never been introduced, so it’s unlikely that any strategies implemented now will need to be unwound.

What does this all mean for you? Well, if you have plans to do anything with your money matters you should contact our office as soon as possible to get your strategy sorted.

So if you were intending on making that non-concessional contribution to super sometime this financial year, consider doing it earlier or if you were planning on starting a TTR pension, this might push you into getting advice today.

Call us and one of the guys will be able to chat about the changes, the impact it may have on you and your financial plan or you can organise for a full review to make sure you’re on the right track regardless of Budget night changes.