
As we begin 2025, here are some important changes you should be aware of:
Superannuation
From 1 July...
The transfer balance cap is increasing in line with inflation from $1.9m to $2m. The transfer balance cap is the maximum amount of funds you can transfer from superannuation accumulation phase which is taxed at 15% on earnings to the tax-free Account-Based Pension phase.
The mandatory superannuation guarantee rate is increasing from 11.5% to 12% per annum. At 12% the SCG rate will finally freeze indexing.
The proposed Division 296 tax in Australia, set to take effect from 1 July 2025, introduces an additional 15% tax on the earnings of superannuation balances exceeding $3 million. It has been widely criticised for including unrealised capital gains on SMSF and WRAP accounts in the calculation and may not pass parliament.
Interest Rates
Will or won't the RBA reduce interest rates? The consensus seems to indicate a few interest rate reductions in 2025.
We have created a blog 'Financial Strategies for when Interest Rates Reduce' to help you position yourself for potential interest rate reductions.
Aged Care Reforms
New entrants with the financial means will be asked to contribute more to the cost of Aged Care. This could impact previous advice estimates client's have received about their later retirement and inheritance wishes.
Federal Election
There will be an election in 2025. In short we know:
Both parties are committed to the same personal income tax rates.
The coalition will likely proceed with a scheme allowing the use of super to purchase first primary residence (which is a terrible idea which will only push up house prices further for FHBs).
Most of the election announcements will be announced much closer to the election.
If you need help navigating any of these changes or you think they may affect you, you can reach out here.
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