Personal Reflections on 2016
While I normally view most events through a financial prism – what might this mean for my clients’ investments – at this time of year I find it is more interesting to reflect on those things that either may have lasting influence – Trump, Brexit, etc – or are significant in some personal way. As a baby boomer, I was saddened by the deaths of a number of musicians I grew up with – David Bowie, Lou Reed, Leonard Cohen & Prince. I saw Bowie at Madison Square Garden in 2003 and he was an exceptional performer with genuine presence. He made androgynous look cool. I don’t feel it was a great year for movies but there were some absorbing series on TV, such as Narcos, the Night Of and The Night Manager. Way too many books I want to read so I won’t go there. If you enjoy live theatre I recommend Jasper Jones at Belvoir which was my theatre highlight of 2016; it is on again from late January 2017.
I lament the declining quality of our major newspapers but the huge diversity of content available via the internet compensates. The PBS NewsHour shown on SBS also helps keep me abreast of events in the US and around the world. Unfortunately the on-going humanitarian disaster in the Middle East, Russia’s malign influence wherever it goes, Chinese assertiveness in the South China sea and rising nationalism in many countries all remain concerning developments.
On a more positive and personal note, my family – Jane, Katherine, Emily & Christina – all had a productive 2016 and 2017 looks promising. Katherine is starting GP training, Emily has started a new job with the British Trade Commission & Christina is heading overseas for a year to continue her studies and to hone her foreign language skills. And in 2016 we welcomed a new member of the family – Lucy the Labrador.
As a sports fan I enjoyed the unexpected success of various teams in Australia (Western Bulldogs & Cronulla) and overseas (Leicester City, Cleveland Cavaliers and most importantly to me, the Chicago Cubs). I still dream of a St Kilda premiership in the AFL. And lastly, I played a lot of tennis, enjoyed it and finished injury free!
Tax Deduction for personal Super Contributions
From 1 July 2017, all individuals under the age of 65, including those not working (and those aged 65 to 74 who meet the work test), will be able to claim a tax deduction for their personal super contributions (within the new cap of $25,000). This is a significant change that will benefit many people such as a non working person who sells an asset and has a significant tax bill that year. Currently the ability to claim a tax deduction is limited to self-employed individuals and those who earn less than 10% of their total income from employment. Other conditions for claiming a tax deduction will remain unchanged. To access the tax deduction, individuals need to submit a valid section 290-170 notice and have it acknowledged by their super fund before they lodge their income tax return.
A deduction will not be available for a limited range of super funds such as defined benefit contributions to Commonwealth public sector super schemes and contributions to untaxed super funds where the contributions are not included in the fund’s assessable income.
Non Concessional Super Contributions
Non-concessional contributions (NCCs) are generally after-tax personal contributions made to superannuation where a tax deduction has not been claimed. They are not included in the assessable income of the super fund and no 15% contribution tax is applied. Such contributions are often funded from an asset sale or an inheritance.
From 1 July 2017, the following changes will apply to non-concessional contributions (NCCs):
- the annual NCC cap is reduced to $100,000 (from $180,000)
- the bring forward NCC cap is reduced to $300,000 (from $540,000)
- transitional rules apply if bring forward cap is triggered in 2015/16 or 2016/17
- NCCs not permitted where total super balance exceeds transfer balance cap
- the ability to trigger and make ongoing NCCs under bring forward restricted as total super balance approaches (or exceeds) the new $1.6m transfer balance cap
- co-contribution eligibility criteria are changed.
From 1.7.2017 to be eligible to make a non-concessional contribution to super an individual must be:
- under age 65, or
- age 65 to 74 and meet a work test (gainfully employed for at least 40 hours in 30 consecutive days in the financial year of the contribution), and
- their total super balance must be under the transfer balance cap (TBC) – $1.6 million in 2017/18 on 30 June of the previous financial year.
Predictions for 2017
At this time of year it is common for commentators to make predictions as to what will happen next year and these are often interesting reading even though we know that most will prove to be wrong. If you enjoy these things you might like to read Danish Saxo Bank’s Outrageous Predictions for 2017. If you want something more sober, Texas-based Geopolitical Futures The World in 2017 is an interesting read.
This newsletter contains general advice. It does not take into account your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.