Superannuation – more changes to the tax regime
Written by: Adam Micmacher
As if the issue of superannuation isn’t complicated enough, following the Budget announcements regarding superannuation, along came another Treasury announcement containing draft legislation to amend the reform package. These announcements are meant to put into effect the compromises reached over the Budget and their controversial changes.
The most recent changes are briefly summarised as:
- No more lifetime cap of $500,000 on non-concessional contributions. This change in the cap was the most controversial part of the Budget proposals and has been highlighted as one of the main reasons for the Liberal party’s poor showing at the last Federal election.
- Instead, the non-concessional contribution cap has been reduced from $180,000 to $100,000 per annum or $300,000 over a 3 year period accessing the ‘bring forward rule’. This takes effect from 1 July 2017.
- For the Year 1 July 2016 to 30 June 2017, members are still able to make a non-concessional contribution of $180,000 or $540,000 where they access the ‘bring forward rule’.
- This non-concessional cap will only be available to members who have less than 1.6million in their super fund.
- For people aged 65 and over, the work test still applies. The work test means that you must have worked for at least 40 hours over 30 consecutive days in one financial year if you wish to make a non-concessional contribution.
- From 1 July 2017, the maximum amount that can be contributed as a concessional contribution will be reduced from $35,000 (for those aged over 50) down to $25,000.
- From 1 July 2018, the government will allow people who have not maximised their contributions in one year to top up the amount in future years. This treatment will be permitted over 5 years and, in effect, means that the total concessional contributions can be up to $125,000, staggered in different amounts over those years.
For example: If in one year, you have contributed $10,000 as a concessional contribution, then in the next year you can contribute $40,000. ($25,000 x 2 years less $10,000 contribution).
This concession is only available to members of super funds whose balances are $500,000 and less.We invite our clients to contact Adam Micmacher for all your queries: adam@lowensteins.com.au