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Friday, 21 July 2017

Legislation making detailed administrative changes to a number of superannuation reforms announced in the 2016 Budget, including the limit of $1.6 million on the balance transferred to the tax-free pension phase of all superannuation accounts, has passed Parliament.

The Finance Minister Mathias Cormann said amendments supporting the integrity of the Government’s suite of superannuation taxation reforms have come into effect with the passage by Parliament of the Treasury Laws Amendment (2017 Measures No. 2) Bill.

The new legislation makes detailed changes to provisions of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 which implemented major changes announced in the 2016 Budget

Treasury Laws Amendment (2017 Measures No. 2) Act makes detailed changes to the 2016 act in relation to:
• the transfer balance cap;
• changes to the concessional contribution rules;
• changes to the non-concessional contribution rules;
• objective of superannuation;
• changes to the transition to retirement income stream rules;
• capital gains tax relief for superannuation funds; and
• streamlining of administrative processes.

The latest changes do not affect the amount of the transfer balance cap, which remains at $1.6 million from 1 July 2017. This amount is indexed to the CPI. However it makes detailed technical changes affecting the cap. According to the Bill’s Explanatory Memorandum these:
• enable additional transfer balance credits and transfer balance debits to be prescribed;
• clarify the matters covered by the assumption about compliance with pension or annuity rules and standards and for which the consequences of not complying with a commutation authority are disregarded;
• enable the correct value for a debit that arises for failures to comply with rules and standards to be calculated for a failure that occurs part-way through an income year;
• provide an alternative debit where the proceeds of structured settlements were contributed into superannuation prior to 1 July 2017;
• provide a transfer balance credit where the repayment of an LRBA shifts value between accumulation phase interests and retirement phase interests;
• amend the rules for the part-year defined benefit income cap so that they only apply where an individual is first entitled to concessional tax treatment in respect of defined benefit income; and
• bring forward the application of the rules about the transfer of assets by life insurance companies to facilitate those companies accounting for and rebalancing their assets in anticipation of the transfer balance cap applying from 1 July 2017.

Senator Cormann said: “These reforms improve the fairness, sustainability, and flexibility of the superannuation system, including:
• ensuring recipients of an existing structured settlement or personal injury order do not pay tax on their superannuation income streams as originally intended; and
• supporting the integrity of the new transfer balance cap by including a repayment of a borrowing under a Limited Recourse Borrowing Arrangement in the cap in certain circumstances.

“As part of this Bill, the Government has also refined changes to personal and corporate insolvency law made by the Insolvency Law Reform Act 2016. This change will reduce legal complexity, increase certainty for insolvency practitioners and remove unnecessary costs from insolvency proceedings,” he said.

“The amendments also assist the Fair Entitlements Guarantee Recovery Program in its work reclaiming funds paid out under the program.”


Click below to view source

Ministerial media release: Changes now in effect to support the Superannuation Tax Reform

Package and amend the Insolvency Law Reform Act

Parliament of Australia: Treasury Laws Amendment (2017 Measures No. 2) Bill 2017

ATO: New transfer balance cap for retirement phase accounts

Professional Planner.com.au: Transfer balance cap means there’s more to report

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