Immediate tax changes in the field of superannuation are currently unlikely, as the government has made no changes to the superannuation taxation provisions in its most recent budget. Despite this however, superannuation taxation reform might be on the cards in the mid term, with the possibility of opposition winning government, or shifts in current government policy to reflect findings in some of their taxation reports.
Much of the discussion has been around introducing a tax on earnings or pensions above a set amount, currently suggested as $75,000. This potentially gives rise to the issue that a single income earner with a spouse or partner may be significantly worse off compared to a couple where both partners work and accumulate similar superannuation benefits. This will result in the single superannuation potentially paying tax where the couple will continue with tax free income streams.
To overcome this imbalance, there are some strategies that can be employed to even out superannuation in relationships. These include annual spouse contributions splitting arrangements, or in retirement, withdrawing money and re contributing to the partner with the lower account balance.
These strategies, will not work for defined benefit pensioners, whose only options to equalise superannuation income involve the acquiring of assets, including superannuation, in the name of their spouse.
For couples who make personal contributions there may be long term advantages in foregoing the short term tax benefit of contributing for the higher income earner and maximising contributions for the lower taxed partner. This may result in long term tax benefits in retirement.
Sound superannuation advice is important to maximise retirement savings and to minimise taxation for both couples and singles. Talk to the dedicated team at Belmores about how they can help you plan for a fruitful and stable retirement.