September 2016 Edition

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Tips and alerts for small business owners

Changes to $500,000 lifetime super cap confirmed but not yet legislated

Foreign resident property acquisitions withholding regime

As part of the 2016 Federal Budget, the Government introduced a lifetime non-concessional contributions cap $500,000 effective from 7.30 pm (AEST) on 3 May 2016 (Budget night). The Government has announced on the 15th September improvements to the superannuation changes announced in the 2016-17 Budget.

The $500,000 lifetime non-concessional cap will be replaced by a new measure to reduce the existing annual non-concessional contributions cap from $180,000 per year to $100,000 per year. Treasury has also confirmed that SMSF's that trigger the non-concessional contribution bring forward rule this financial year and do not utilise the full bring forward amount before 1 July 2017 will no longer be able to utilise the full $540,000 cap.

Also, individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional (after tax) contributions from 1 July 2017. This limit will be tied and indexed to the transfer balance cap of $1.6 million. These measures mean that with their annual concessional contributions individuals will be able to contribute $125,000 each year and, if taking advantage of the non-concessional 'bring forward', up to $325,000 in any one year until such time as they reach $1.6 million.

In order to fully offset the cost of reverting to a reduced annual non-concessional cap, the Government will now not proceed with the harmonisation of contribution rules for those aged 65 to 74. Individuals aged 65 to 74 who satisfy the work test will still be able to make additional contributions to superannuation as was the case before the budget. In addition, the commencement date of the proposed catch-up concessional superannuation contributions will be deferred by 12 months to 1 July 2018.

Please contact the Goodwin Chivas team for more information.