20 Sep Important Super Changes
Important – Absolute detail of measures will only be known once draft legislation is published and the parliament considers the legislation – so it is still early days.
We will keep you updated as the legislation progresses however the following is a summary of what is being proposed.
Non-concessional contribution cap (superannuation contributions from after tax income):
- Original proposal to replace the existing non-concessional contribution (NCC) cap with a lifetime limit of $500,000 including all NCCs made since 1 July 2017.
- This is replaced with an annual NCC of $100K (currently $180K) from 1 July 2017. Individuals under 65 will also be able to continue to contribute up to 3years.
- Individuals with a super balance of more than $1.6 million will no longer be able to make NCC from 1 July 2017. The individuals account balance will be tested at 30 June of the previous financial year.
- As the existing rules remain until 1 July 2017, individuals who are able to utilise the existing thresholds should consider doing so once the legislation is finalised.
- It was proposed to remove the work test for individuals aged 65 to 74. The Government will not proceed with this change. This means the work test of 40 hours within 30 days must be satisfied for those aged 65 to 74 to be eligible to make contributions to superannuation.
Catch up concessional contributions (superannuation contributions from before tax income):
- The commencement date for the catch up contributions (up to the previous five years) will be delayed until 1 July 2018
- The measure is limited to individuals with a super balance of less than $500K. Clients who have the capacity to fully utilise the current CC cap for the 2017 financial year may wish to consider doing so before the CC cap reduces.
- The Government will continue with the proposal to reduce the concessional contribution (CC) cap to $25,000 from 1 July 2017.
- $1.6 million transfer cap for tax free earnings in the pension phase of superannuation and the need to reduce pension balances to this threshold by 1 July 2017
- Tax on earnings for amounts held in a transition to retirement pension
- Reduce the income threshold from $300,000 to $250,000 that the additional 15% tax is payable on CCs
- Ability for all individuals to claim a tax deduction for superannuation contributions with the removal of the 10% test
- Increase of the income thresholds for eligibility for the spouse superannuation contribution tax offset
- Introduce the Low Income Superannuation Tax Offset (similar to the Low Income Superannuation Contribution which will be abolished from 1 July 2017)
- Abolish anti-detriment payments
- Apply the measures to defined benefit funds.
If you need any help with understanding what this may mean to you call our financial planning specialist Daniel Sullivan on 02 4926 2699.
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