Hello Ed, thank you for your email. The proposed budget changes to superannuation were widely reported to be a cause of the government’s poor result at the recent election. It was certainly interesting timing to announce such potentially unpopular changes just before an election.
There was opposition to the changes both within the Liberal Party and also from the Labor Party. As a result, the government has made the following amendments to the proposals:
The $500,000 lifetime non-concessional cap (from 1st July 2007) has been scrapped
Contributions for people between ages 65 and 75 will still be subject to the work test (40 hours of paid work within 30 days) at least once in the financial year of contribution
Those with $1,600,000 or more in superannuation can no longer make non-concessional contributions
Annual non-concessional cap reduced to $100,000 (from $180,000) from 1st July 2017
Bring forward rule still applies, i.e. those under age 65 bring forward up to 3 years’ non-concessional contributions along the same lines as current law
Catch up concessional contributions deferred until 1st July 2018 (allowing those with balances under $500,000 to make extra concessional contributions if they have not used the full cap in a five year period).
It appears that the other changes proposed in the budget remain unchanged. These include:
ability for all individuals to claim a tax deduction on contributions (up to the $25,000 cap)
reduce the income threshold above which high income earners would pay an additional 15% tax on concessional contributions from $300,000 to $250,000;
impose a $1.6m pension transfer cap on amounts transferred from accumulation phase to pension account-based pension phase;
remove the tax exemption on investment earnings generated by TRIS (transition to retirement income streams) balances;
remove the ability for individuals to elect for payments from a TRIS to be taxed as a lump sum;
increase the income threshold that applies for the 18% personal tax offset available to individuals who make contributions for their spouse (from $10,800 to $37,000); • introduce a low income superannuation tax offset (up to a maximum of $500) for the tax paid on concessional contributions for individuals with income up to $37,000; and • removal of the anti-detriment deduction
This may change again before it is legislated (or even by the time you read this). One thing that will not change is the need for advice. These changes may provide opportunities for you in this financial year which will not be available next financial year. Please arrange a time to see your financial planner, or give me a call on 9452 7871.