There is growing speculation that changes will be made to the taxation treatment of Transition to Retirement Income Streams (TTRs) in this year’s Federal Budget. These changes may see a reduction in the tax benefits which currently apply to these types of pensions and associated strategies.
Whatever changes are announced in relation to TTRs, we believe it is unlikely those changes will apply to income streams which were commenced prior to this year’s Federal Budget. The Treasurer has previously stated that the Government will not be making changes to the superannuation tax concessions which adversely impact on those who are already in the pension phase.
This means clients, who have attained their preservation age, have an opportunity to commence a TTR pension before this year’s budget and lock in the existing tax benefits associated with these pensions.
If no changes are announced to TTR pensions in this year’s Federal Budget, the adverse consequences of having commenced a TTR pension in anticipation of changes are likely to be minor. Some administration costs may be incurred when the pension is commenced, and the pension can be subsequently commuted and the proceeds rolled back to the superannuation accumulation phase. It is also a legislative requirement that your client is paid their pro-rated minimum pension payment for the financial year prior to the commutation taking place.
|Date of birth||Preservation age (years)|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
Cambridge Private Wealth Pty Ltd (ACN 607 806 244), Authorised Representative and Credit Representative of Charter Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee.
General Advice Warning – This newsletter contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider you financial situation and needs before making any decisions based on this information.