There are rumours aplenty about possible tax and super changes.

I have to admit that some of the rumours swirling around are pretty scary and some pre-emptive action might be worth considering.

Uncertainty is the biggest problem. Right now we don’t know when changes will be released, what date they will start or stop and what they will contain.

We seem to be in the middle of the typical snow job from the government – release nasty rumours and then formally announce something that doesn’t seem so bad.

One of the weirdest problems I see is that the government seems determined to hit its core constituency. Just why you might behave this way is somewhat odd especially in an election year.

Here are four ideas I have to ensure you’re not blind-sided if the government is nasty:

1. Maximise super contributions as soon as possible

There are rumours that the government is planning higher taxes on super contributions and/or reducing the various contribution caps before penalty taxes apply.

To implement this you might even consider borrowing money (don’t forget to factor in your ability to borrow money and its costs).

An advantage for employers is that the money they borrow to make super contributions for their employees is tax deductible. Money you borrow to make personal contributions isn’t tax deductible.

Before making any additional super contributions this year, don’t forget about the contribution caps that apply this year as outlined in the table below. This is of course, assuming that the government doesn’t change them. It would be highly irregular if they did change them for the 2016 financial year but we live in strange times.

Source: ATO

2. Take more income from your pension especially if these payments are tax-free

The government might tax pension income amounts if they’re above a certain amount.

To circumvent this idea, you could consider taking several years’ pension income this year assuming that your pension’s documentation allows you to do this. You might not be able to achieve this if you’re receiving a transition-to-retirement pension.

Theoretically the super laws demand that super pensions pay a minimum income amount each year, but no maximum. But you need to check the documentation attached to your pension. If the no maximum income rule applies to your pension you can pay yourself whatever income you like this year tax-free.

If you receive any Centrelink benefits and you’re subject to an income or assets test for these benefits, you need to consider what the impact there might be to these benefits if you take additional income this year.

From a tax perspective you need to consider how the excess pension income you take this year will be invested. It’s likely you will have some additional income subject to income tax.

If you’re at the preservation age (at least 56 years old this financial year) and under 60, then the additional income will be assessed for income tax less a tax offset on your personal income tax return.

Another related issue you need to consider is how you might generate this extra income in your fund this year. Does it mean you need to sell some assets? Perhaps your fund owns some assets that can’t generate the additional income and you don’t or can’t sell those assets. Clearly careful planning is essential.

3. Commence a transition-to-retirement pension

If you’re aged between 56 (this financial year) and 65 and still working then you should consider commencing a Transition to Retirement (TTR pension).

The government may not allow new TTR pensions or may restrict their future use. You can always stop a TTR pension if you don’t need it and the government leaves these rules alone.

The only pitfall to this strategy is if the government makes retrospective changes to these pensions to either ban them or constrain their use.

4. Recycle assets in your pension funds

What do I mean? – This is best explained using an example. Let’s assume you own some shares in your pension fund that originally cost $1 each and they’re now valued at $3 each. You like the company and have no immediate plans to sell the shares.

You might like to consider selling these shares at the current market value and then not long after buying the shares back at the current price that is higher than your original $1 purchase price.

There are rumours that the government might impose a tax on pension funds. By buying the shares at the higher price you will reduce the amount of tax your fund might pay in the near term because the cost base of the asset will be higher than it is at present and hence when you go to sell the shares, the taxable gain will be lower.

A problem could arise given that the Australian Taxation Office doesn’t like something known as “wash sale agreements”.

Typically, however, this is only a problem if you sell an asset for a loss and buy it, or another similar asset, not long after.

Selling and buying an asset can also be difficult to do with other assets such as artwork, collectibles etc. and big value assets such as real estate.

Another related problem is that if every super fund began recycling assets on the stock market, then this may have a temporary impact on the value of those shares.

One final issue to consider here – transaction costs. Don’t forget to consider the transaction costs before you begin buying and selling any assets in your super fund.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.