The government’s new superannuation reforms are the largest superannuation changes since 2007. The legislation giving effect to these reforms has now passed both houses of Parliament. Now superannuants and their advisers can more confidently plan around the implications arising from these changes.
From 1st July 2017 this law will:
- Prevent those with total superannuation of more than $1.6 million as at 30th June in the previous financial year from making any further Non Concessional Contributions.
- Limit the amount a person can hold in pension phase within superannuation to $1.6million.
- Reduce the concessional contribution limit to $25,000.
- Remove the requirement to receive less than 10% of your income from employment sources in order to be eligible for a personal tax deduction on concessional superannuation contributions.
- Reduce the annual Non-Concessional Contribution limit from $180,000 to $100,000 p.a., or $300,000 brought forward over a three year period.
- Change the tax treatment of a Transition to Retirement Income Stream (TRIS), so that the tax on underlying fund earnings becomes the same as an accumulation fund – 15% tax on fund income earnings and 10% tax on fund capital gains where an asset is held for more than 12 months.
- Reduce the income threshold for additional contributions tax for high income earners to $250,000.
- Apply a low income superannuation tax offset to the superannuation fund to offset the tax payable on concessional contributions where a person’s adjusted taxable income is $37,000 or less.
- Remove the ability for a superannuation fund to claim an Anti-detriment deduction when they pay a superannuation benefit on the death of a member to benefit their spouse, former spouse or child.
- Increase the income threshold for spouse contributions tax offset to $40,000.
Find out how the upcoming Australian superannuation changes will impact you.
From 1 July 2018, the law will:
- Carry forward any unused concessional contribution limit for up to five financial years, if the member’s superannuation balance is below $500,000 before the start of the financial year in which the catch up contributions are to be made. An individual won’t have an unused contribution limit earlier than 1st July 2019.
We are already finding that practical application of these rules creates some opportunities for finesse, so ring us if you’d like professional advice in this area.
If you would like to discuss the information in this article or your investment options with one of our wealth management professionals, get in touch today!
Disclaimer: All information in this article is intended to be general in nature for discussion purposes only. So you should not rely on it and seek personalised professional advice before making any decision.