The Treasurer has back-flipped on a number of key superannuation reforms announced as part of the Federal Budget in May this year. Although not yet legislated, these proposed changed should be carefully considered as they may significantly impact your current superannuation and retirement strategies.
The proposed $500,000 lifetime non-concessional cap will be scrapped with a new measure to reduce the existing annual non-concessional contributions cap from $180,000 per year to $100,000 effective 1 July 2017.
The ‘bring forward’ rules which allow eligible individuals under 65 years of age to access three years’ worth of non-concessional contributions into a single year are expected to remain the same. However the maximum amount which may be contributed in this regard is expected to be $300,000 (being three years of $100,000) effective 1 July 2017. This represents a reduction from the current $540,000 which is expected to remain until 30 June 2017. If you have used the ‘bring forward’ rules in recent years, please contact us to discuss how this will impact your circumstances.
In addition, individuals that have superannuation balances in excess of $1.6 million on 1 July 2017 will no longer be able to make non-concessional contributions to super. It is expected the Government will also limit the maximum amount that can be converted to pension phase to $1.6 million per member, any remaining Superannuation balances may remain in accumulation phase.
At this stage it appears the following announcements made during the May Federal budget will still take effect:
- The ‘work test’ will still be scrapped and accordingly, those aged 65 to 74 will need to be working in order to contribute to superannuation.
- There will be a reduction in the concessional contribution cap to $25,000 for individuals effective 1 July 2017.
- From 1 July 2017 the threshold at which high individuals pay additional contribution tax of 15% (under Division 293) will be lowered from $300,000 to $250,000.
Please note that these announcements have not yet been legislated nor have any bills been introduced to parliament at this stage.
Further details regarding the announcements can be found on the Government’s Treasury website here: http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/Superannuation-Reforms
If you would like to discuss the Superannuation rules or want more information regarding the proposed Superannuation changes please do not hesitate to contact us on (02) 9262 4933.
Disclaimer – This Client Alert has been prepared by CE Super Advisory Pty Limited acting as Corporate Authorised Representative of Chairmont Capital Pty Limited AFSL 285043. This document is not considered to be financial advice. To the extent permitted by law, this should be considered general information only and no action should be taken based on the above.