Baby Boomers

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Negative gearing becomes less effective as marginal tax rate lowers, late-middle-aged SMSF investors have been warned.
Tony Bates, chief executive of Bluepoint Consulting, says negative gearing into property might have proved a successful strategy throughout a Boomer's high-flying career "but in your late 50s and early 60s it's time to slow down."
"My advice to Boomer clients is to transition slowly into retirement, pedal slower and progressively shift gearing down to zero," he told the Australian Financial Review, which reported modelling released by the Australian Institute of Superannuation Trustees and Mercer which showed very high-income earners received an average of $335,000 more over a lifetime in government support via superannuation tax concessions towards their retirement incomes, than the level of government support provided to median-income earners.
"Negative gearing becomes less and less effective as your marginal tax rate lowers," Bates warns.
"With the possibility of very low tax rates in retirement through generous super arrangements, I am cautioning Boomers against extending their already geared property portfolio if this is at the expense of accumulating super," he says.
Those coming to retirement need to wind down debt, sell surplus property and maximise contribution caps.
Using the "bring-forward" provisions for after-tax (or non-concessional) contributions would enable a couple to inject $1.44 million into super over two years, says Bates, or $720,000 for an individual.
It could work where in June this year the investors make an after-tax contribution of $180,000 for this financial year; then in July this year you could contribute $540,000 for the 2016, 2017 and 2018 financial years. 
The "bring-forward" rules allow you to make contributions for this and the next two years at the same time, as long as no further contributions are made until the fourth year.  
The maximum non-concessional contribution for an individual is now $180,000, up from $150,000.
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Baby Boomers

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