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CHANGES IN SUPERANNUATION FROM 1 JULY

Saturday, 29 April 2017

The Australian Tax Office (ATO) has issued a reminder about changes in superannuation arrangements including concessional and non-concessional contribution caps which come into effect from 1 July 2017.

The changes were announced in the 2016 Budget but were substantially modified after the July 2016 election as a result of pressure from the Coalition backbench

In summary, the changes affect superannuation contributions if:
• you make extra super contributions, including through salary sacrifice
• have an income over or close to $250,000
• you or your spouse have an income less than $40,000
• you've taken a break from the workforce or you work part time
• you're approaching retirement.

 

Changes to non-concessional contribution caps:
• From 1 July 2017, the annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year. This will remain available to individuals aged between 65 and 74 years old if they meet the work test.
• The non-concessional contributions cap is set at four times the concessional contributions cap ($25,000 for 2017–18) and will increase in line with the indexation of the concessional contributions cap.
• Additionally, from 1 July 2017 your non-concessional cap will be nil for a financial year if you have a total superannuation balance greater than or equal to the general transfer balance cap ($1.6 million in 2017–18) at the end of 30 June of the previous financial year. In this case, if you make non-concessional contributions in that year, they will be excess non-concessional contributions.

 

Changes to concessional contribution caps:
• Concessional contributions are paid before tax is applied, it means that your super fund pays 15% tax on the contribution when it is paid to them.
• From 1 July 2017, the concessional contributions cap is $25,000 for everyone. Previously, it was $35,000 for people 49 years and older at the end of the previous financial year and $30,000 for everyone else. The new cap will be indexed in line with average weekly ordinary time earnings (AWOTE), rounded down to the nearest $2,500.

 

Cap on concessionally-taxed retirement-phase accounts:
• From 1 July 2017, there is a limit on how much of your super you can transfer from your accumulation super account(s) to tax-free ‘retirement phase’ account(s) to receive your pension income.
• This limit is known as the ‘transfer balance cap’. The cap relates to the amount you transfer into retirement phase accounts. There is no limit to the amount of money you can have in your accumulation super account(s).
• The transfer balance cap will start at $1.6 million, and will be indexed in line with the consumer price index (CPI), rounded down to the nearest $100,000.

 

Click below to view source

ATO: Super changes start 1 July 2017

ATO: Super changes

ATO: Change to non-concessional (after-tax) contributions cap

ATO: Change to concessional (pre-tax) contributions cap

ATO: New transfer balance cap for retirement phase accounts

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