What the government superannuation announcements mean for you
16 September 2016
Yesterday the government made further superannuation announcements, including the scrapping the $500,000 lifetime non-concessional cap and removal of the retrospectivity. This is good news for superannuation savers.
The major change announced is the reduction of the non-concessional contributions cap from $180,000 per annum down to $100,000 per annum (from 1 July 2017). You will still be able to use the ‘bring forward’ rules, making a maximum of $300,000 in non-concessional contributions over 3 years. However, it is proposed that when your account balance reaches $1.6million, you will no longer be able to make non-concessional contributions.
So for the 2016/17 financial year the current rules apply - $180,000 of non-concessional contributions (or $540,000 for the 3 year bring forward).
Other changes announced include the retention of the work test for 65 – 75 year olds, this is disappointing.
These constant changes make it difficult to keep track of what you are supposed to be doing in this space. We urge you to contact us to ensure that you have considered all relevant matters before making any significant contributions to super. Here is the current state of play (or proposed state of play) as to super changes around contributions:
- The work test will remain in place for 65-75 year olds (40 hours in 30 days) (government announcement)
- Personal deductions will be allowed for all individuals for superannuation contributions, regardless of employer support (yet to be passed)
- Retention of LISC/LISTO (yet to be passed)
- Increase in spouse income threshold increased (for spouse contribution) (yet to be passed)
- Removal of $500,000 lifetime cap for non-concessional contributions (NCC) (government announcement)
- Reduction of NCC annual cap from $180,000 to $100,000 pa – 3 year bring forward rule still allowed (government announcement) From 1 July 2017
- Introduction of balance cap for NCCs – when the balance is >$1.6m you cannot make further NCCs (government announcement) From 1 July 2017
- New ‘catch up’ for concessional contributions (ie 5 year catch up proposed in budget) delayed start date of 1 July 2018 (government announcement).
If you have any question please call Shirley or one of her team who will be able to answer all of your questions.