Are you aware of Superannuation changes 1 July 2017
The Government superannuation changes have been subject to ongoing negotiation for over a year – often quoted as the most significant reforms to superannuation in a decade. The reforms have now been passed which means many changes to the super system will take place from 1 July 2017. Most commonly talked about are:
- The annual non-concessional contributions cap will reduce from the current level of $180,000 to $100,000 (and will then increase in line with the indexation of the concessional contributions cap).
o However, anyone fortunate enough to be able to make a significant contribution before 30 June 2017, can still contribute up to $540,000 under the 3 year bring-forward rules, provided they meet the existing conditions.
- The new annual concessional contributions cap will be limited to $25,000 for all individuals regardless of age.
o It is not all bad news though, as from 1 July 2019 you may increase your concessional contribution cap by carrying forward your unused concessional caps amounts if you have a total superannuation balance of less than $500,000.
- All individuals under the age of 75 will be permitted to claim tax deductions for personal super contributions (voluntary concessional contributions), not just those predominantly self-employed as per the current law.
o If you currently salary sacrifice super under an arrangement with an employer, you can continue this option. For those employees who have not been able to take advantage of this option, this opens up new opportunities.
- Low Income Super Contribution concept to continue but under the renamed Low Income Superannuation Tax Offset
o This is welcome news for low income earners trying to add to their super. Individuals with an adjusted taxable income of $37,000 (or less) will continue to be entitled to a refund of contributions tax paid on concessional contributions, up to a limit of $500.
- Increase In income threshold for spouse superannuation tax offset from $10,800 to $37,000, and phase out at $40,000.
o Again, this is welcome news for low income earners trying to add to their super, by giving greater access to tax concessions when making contributions to your spouse superannuation account.
- Removal of tax exemption on earnings derived from transition to retirement pension (TRIP) assets from 1 July.
o While this will make TRIPs far less attractive in future, current TRIP holders may still obtain a reduced benefit due to the tax offset on pension payments. This will depend on individual circumstances so it will be necessary to seek specific advice.
There are many other changes, and a lot of technical questions around the above. If you need to make super decisions before 30 June or want more information on the changes, we can advise you.