Preservation age increased

Preservation age has been slowly increasing since July 2016. After two years where preservation age was 56, 2018/19 sees preservation increase age again to 57. Preservation age will increase again in 2020/21.

It is important to keep in mind the new preservation age when discussing strategies with clients. A range of super rules reference preservation age. These include when a transition to retirement pension can commence, the rate of tax payable on a lump sum withdrawal and a number of conditions of release (such as the retirement condition of release).

Not everything changes

  • There are a range of thresholds that did not increase on July 1, 2018. Some prominent ones include:
  • The concessional contributions cap
  • The non-concessional contributions cap
  • The general transfer balance cap
  • The rate of SG
  • The rate of social security pensions
  • LITO
  • Basic daily care fees for residential aged care and home care

The changes that take effect in 2018/19 are overall positive for clients and their planners. Clever management of the new rules will open up a raft of opportunities, particularly for a younger age demographic that has not, historically, sought financial advice.

The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.

The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.