Superannuation reforms have been passed, with the changes most likely commencing 1st July 2017.
Key changes include:
Reduction of concessional (pre-tax) contributions cap to $25,000
This reduction will be for all individuals regardless of age, from 1 July 2017.
It was previously $30,000 for those under 49 in the previous year or $35,000 for those aged over 49 in the previous income year.
Concessional contributions can include employer Superannuation Guarantee, salary sacrifice amounts and contributions claimed as deductions in personal tax returns.
Allowing a catch up regime for super funds with a balance of $500,000 or less
Members with low contribution amounts or interrupted work capacities will be able to catch-up on their superannuation.
This catch-up regime from 1 July 2018 will allow members to carry forward unused concessional contribution caps on a rolling basis for up to 5 years, if the account balance is $500,000 or less.
The increased flexibility for making catch-up payments will make it easier for people with interrupted work patterns, such as women and men temporarily leaving the workforce to raise children, to save for retirement and benefit from tax concessions.
Individuals aged 65 to 74 who meet the minimum work requirements test will also be given access to the new catch-up arrangement.
A $1.6 Million transfer balance transfer cap
Individual members of superannuation funds will be limited to a tax-free amount of $1.6 million when transferring money to their retirement phase.
Savings in excess of $1.6 million can remain in superannuation in accumulation phase where it will be taxed at a rate of 15%.
For those already in pension phase and more than $1.6million, excess funds above this will need to be moved from pension phase to accumulation phase within super by 1 July 2017.
Lowering the annual non-concessional (after tax) contributions cap
The non-concessional contributions cap will be lowered to $100,000 from 1 July 2017.
Individuals who have a balance of $1.6 million or more will no longer be eligible to make non-concessional contributions.
Individuals under 65 years old will still be able to bring forward 3 years of non-concessional contributions.
Other noteworthy reforms include:
- As of 1 July 2017, the income threshold for Taxation Division 293 will be reduced to $250,000 from its current $300,000, raising the tax rate to 30% rather than 15%
- Individuals up to 75 years of age will be able to claim personal deductions for super contributions without testing the proportion of employee v’s self employed income that was received
- Introduction of the Low Income Superannuation Offset, this will allow individuals with a taxable income of $37,000 or less to receive refunds of tax paid on concessional contributions
If you require further information or taxation advice relating to the proposed superannuation changes, please contact your adviser. We also have an in-house accountant who is available to service your taxation needs and is happy to receive your call.
The Jetty Ruins of Port Willunga in semi-rural Adelaide are the remains of a working port from 1853. The vintage feel of this site against the backdrop of a beautiful beach makes it a popular attraction for visitors. The wooden piles of the Jetty Ruins are of various heights, much like the differing superannuation rates and thresholds. Their existence and condition depends entirely on how much they can withstand erosion and the test of time