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Upcoming changes in superannuation

 

1. Concessional contribution cap
The concessional contribution cap will reduce to $25,000 per annum for all taxpayers regardless of ages from 1 July 2017. Whistle taxpayers over age of 65 still need to satisfy with the work test in order to make non-super-guarantee concessional contributions (e.g. Salary-sacrifice contribution). In the 2016-17 financial year, fund members could make $30,000 for people aged under 49 and $35,000 for people aged 49 and over.

2. Removing the 10% Rule to Allow Tax Deduction for Personal Superannuation Contributions

From 1 July 2017, an individual is not required to earn less than 10% of their income from their employment related activities to be able to deduct a personal contribution to superannuation.

Removing the 10% rule will allow all taxpayers to claim a deduction for personal contributions made to superannuation from 1 July 2017 onwards, which means this will allow taxpayers to make a contribution from their after-tax income during an income year and then claim a tax deduction for the contribution.


3. Carry
forward of unused concessional contribution

From 1 July 2018, a member with a superannuation balance of less than $500,000 at the end of 30 June of the previous financial year, can carry forward from previous financial years (up to a maximum of 5 years) any unused concessional contribution and make more concessional contributions. Please note the first year you will be entitled to carry forward any unused amounts is in the 2019-20 financial year.

4. Non-concessional contribution cap reduction

The annual non-concessional contribution cap (NCC) will be reduced to $100,000 per annum and restrict access to taxpayers with a total superannuation balance of under $1.6 million.


The
$540,000 bring forward rule will apply for the remainder of 2016-17 income year for those eligible.


If
the bring forward provision is triggered in 2016-17 but the full $540,000 amount is not used, then the bring forward cap available in 2017-18 and 2018-19 will be reduced.


Please
refer to the following table for further clarification:

 

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20

$180,000

$180,000

$180,000

$100,000

$100,000

$100,000

0 to $540,000

 

 

 

 

0 to $460,000

 

 

 

 

0 to $380,000

 

 

 

 

0 to $300,000


Also, taxpayers who are approaching a balance of $1.6 million will have their ability to use the bring forward rule reduced. Where a superannuation balance is between $1.4 million and $1.5 million the bring forward rule will be limited to a maximum of $200,000. In addition, where a superannuation balance is between $1.5 million and $1.6 million the bring forward rule will be limited to a maximum of $100,000.

2017-2018 Bring forward period

Total superannuation balance on 30 June 2017

Non-concessional contributions cap for the first year

Bring forward period

Less than $1.4 million

$300,000

3 years

$1.4 million to less than $1.5 million

$200,000

2 years

$1.5 million to less than $1.6 million

$100,000

No bring forward period, general non-concessional contributions cap applies

$1.6 million

Nil

N/A


Transition to Retirement Pension (TRIS)

Transition-to-retirement income streams (TRIS) are currently available to assist individuals to gradually move to retirement by accessing a limited amount of super. Currently, where a member receives a TRIS, the fund receives tax-free earnings on the super assets that support it.

From 1 July 2017, the government will remove the tax-exempt status of earnings from assets that support a TRIS. Earnings from assets supporting a TRIS will be taxed at 15% regardless of the date the TRIS commenced.

Members will also no longer be able to treat super income stream payments as lump sums for taxation purposes.

Please call your manager or partner or financial planner at Goodwin Chivas to discuss how these changes impact you.

     

   

Contact details

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Norwest Business Park
Baulkham Hills, NSW 2153 Australia
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P: (02) 9899 3044
F: (02) 9899 1524
E: admin@goodwinchivas.com.au

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