February 17, 2017
Changes to Superannuation
The Federal Government’s 2016 budget report passed through both the lower and upper house at the end of October last year, which means changes to legislation are due at the beginning of next financial year (2017/18). As always, your accountant is aware of how these changes may affect you and your business, but please contact us if you have any immediate concerns.
The concessional contributions cap will be lowered from $30,000 (or $35,000 for those aged 50+) to an indiscriminate $25,000 across the whole nation.
The Government’s first iteration of the 2016 Federal Budget proposed a $500,000 lifetime cap on non-concessional super contributions, which was designed to take into account all contributions made between 1 July 2007 and 3 May 2016. After a heated debate with members of the opposition with many Australian’s expressing their distaste, the Turnbull Government has since pulled back on their initial proposal and this policy will no longer be implemented.
The next alternative, which has since been approved in parliament, implements an annual after-tax contributions cap of $100,000, which will replace the current cap of $180,000. The legislation outlines that anyone under the age of 65 will still have the ability to bring forward three years’ worth of after-tax contributions, but with a maximum cap set at $300,000.
Transition to Retirement
Earnings on fund assets that support a pension have been tax free in the past – however this will no longer apply to Transition to Retirement (TTR) income streams under new reforms. These assets will now attract the maximum 15% rate that applies to normal accumulation funds.
Anyone converting their superannuation into a pension to derive income will be restricted to a limit of $1.6 million in tax-free exemptions (excluding additional earnings).
Anyone with a balance above that will need to have the excess moved and placed back into the super accumulation process, where those earnings will be taxed at the normal concessional rate of 15%. Alternatively, they can be taken out of your superannuation account all together.
Need more information?
If you want to find out more about upcoming changes to superannuation, simply give us a call today.