The way you save for retirement is changing. From July 1st this year, the Australian Taxation Office (ATO) is making a huge number of changes to self-managed super funds – and nobody is immune.

For most trustees, this is going to completely change your SMSF compliance requirements. While we can cover some changes here, you're going to need the appropriate financial advice to make sure that you don't get caught out.

You can't contribute as much to SMSFs

Both concessional and non-concessional contribution caps are coming down – if you exceed these, you could be in trouble. While people under and over 50 could previously contribute $30,000 and $35,000 respectively before tax, from July 1st you'll only be able to put $25,000 in per year.

For post-tax SMSF contributions, the cap is coming down from $180,000 to $100,000.

The amount you can contribute to an SMSF is changing - for the worse.The amount you can contribute to an SMSF is changing – for the worse.

If you go over these caps, the money will be treated by the ATO as regular income – you'll also have to pay an extra tax. It's an arm and a leg, and structuring your contributions in a new way is going to be essential. 

For those under 65, this may mean bringing forward up to two years of non-concessional contributions, which could be $540,000 if you pay it prior to June 30, 2017. For people over 65 that meet work test requirements, you can make $180,000 of bring-forward contributions before June 30, and up to $100,000 after. 

However, this requires a strict analysis of your previous contributions – Accountants Australia's financial planners can help you to work this out. 

A limit on your pension account

Thought you could put as much as you wanted away for the pension phase of your SMSF? You're going to have to think again. The ATO is introducing a $1.6 million transfer balance cap, which means this is the maximum you can have in the retirement phase of your fund.

While this is a significant amount, it will still impact many Australians that have spent a long time building a huge nest egg – it's cutting years of planning off at the knee. It also introduces stringent new reporting conditions for when funds move from the accumulation phase into the pension phase, and many trustees might have to move a lot of their assets back into accumulation to stay under the transfer cap.

If this excess is less than $100,000 then you have six months to roll it back to accumulation, but excess of more than $100,000 must be moved by July 1st. This is a short time frame, and you will need financial professionals that can provide prompt service that ensures you remain compliant. Otherwise, you could find the ATO hot on your heels. 

These are just a couple of the changes, which come under a total of 12 different ATO categories. As far as we can see, many people simply aren't ready for these. Whether you need financial planning advice or a professional tax agent to look at your compliance, give our team a call.