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There has been a lot of speculation about the upcoming budget, yet there is still a long time (especially in political terms) before we can all sit in front of our TV screens with a glass of red on that much anticipated and exciting Tuesday evening in May.

Last month the speculation was of a GST increase, this month it’s a tightening on negative gearing and work related deductions. By the time May is here it could include just about anything! However, what most commentators do agree on is that superannuation is likely to see some changes. So we thought we would take a look at a few things you might want to think about before budget night…

1. Pensions. If you are over 56 years of age (and therefore eligible for a pension, including a Transition to Retirement Income Stream (TRIS)) you may want to consider commencing the pension before budget night. There is some speculation that pensions may have less flexibility than they currently have, and that the new rules may only apply to pensions commenced after any announcement.

2. Asset sales. There has been talk about changes to the Capital Gains Tax rules. Currently no tax is payable on assets sold while those assets are used to fund a pension. Where no pension is being taken, tax is 10% for assets that have been held for more than 12 months. If you were looking at rebalancing a share portfolio or offloading a property in the near future, then bringing it forward might be an attractive option. It goes without saying that selling assets purely on the basis of speculation around tax is not a sound decision, but it certainly would not hurt to make a time to speak to your advisor about your assets.

3. Contributions. There has also been talk about limiting the amount that can be contributed to super given the concessional tax treatment assets in super receive. If you have been considering making large contributions over the next few years you may wish to consider whether this decision can be brought forward. If you intend to make an annual contribution this year you may also wish to bring this forward if there is no downside in doing so.

4. Split your balance. If the balance of your fund is significantly different to that of your spouse you may want to look at balancing them up. Both sides of politics have discussed the possibility of taxing funds over a certain value. This would likely be assessed on a person by person basis rather than a shared limit for a couple. Balancing your balances may mean you both fall under any such limit.

Of course this is all speculation. It still requires a decision by government….. and then it requires both houses of parliament to come to an agreement and pass the legislation to make any announcements a reality for us all.

So the best advice now would be to call your advisor and review your situation before you sit down on May 10 with that glass of red in hand.

General Advice

The information provided by Bentleys (Sunshine Coast) Pty Ltd does not constitute financial product advice and is for general information only. It is written without taking into account any individuals personal objectives, situation or needs, and is not intended as professional advice. Any person acting upon such information without receiving specific advice, does so entirely at their own risk. Please contact your Accountant to discuss your personal situation before relying on this information.