The government has had another crack at getting its superannuation policy right with a number of changes announced today including abandonment of the controversial $500,000 lifetime non-concessional contribution cap. The adjusted proposals are outlined here: http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/Superannuation-Reforms#transfer The proposals still have to make it through both houses of parliament.
- New annual non concessional contribution cap of $100,000 from 1/7/17
- 3 year bring forward retained for members <65
- Members with total super >$1.6m (pension and accumulation) at 30th June in the previous year will be precluded from making any non-concessional contributions
- From 1/7/17 individuals with balances close to $1.6 million will only be able to access the number of years of bring forward to take their balance up to $1.6 million.
- The work test for members >64 will now be retained requiring work 40 hours within a 30 day period each income year to be eligible for non SGC contributions.
- From 1/7/17 there will be no 10% Rule preventing tax deductions on personal concessional contributions for members who earn less than 10 per cent of their income from salary or wages.
- The new rule allowing up to 5 years catch up concessional contributions for members with balances <$500 will be delayed to a 1/7/18 start date.
On the face of this the key opportunities are:
1.Non – Concessional Contributions up to $180k or $540k (with 3 year bring forward) for under 65s for 2016/17
2.Non – Concessional Contributions up to $180k for members >64 passing the work test for 2016/17
3.Existing fund balance >1.6m does not impact ability to make non-concessional contributions in 2016/17.
Effectively the pre 2016/17 Federal Budget Status Quo has been restored in relation to 2016/17 contributions.
Given the complexity and uncertainty involved in superannuation you should always contact us to confirm intended contributions or withdrawals.
Note that this content in relation to superannuation deals only with taxation aspects. We are not licensed to provide investment advice regarding investment products including superannuation. If you require financial advice about superannuation you should consult the holder of an appropriate financial services licence.