This week the long mooted changes to superannuation have been passed by the Senate. It is disappointing that some of the changes announced in the May 2016 budget did not make it into legislation. However, some of the retrospectivity has been scaled back which provides time to plan prior to the changes taking effect on 1 July 2017.

Now is the time to plan. We will be in contact in the near future to discuss changes. In the meantime, please do not hesitate to contact us with any questions you may have.

The changes are summarised as follows.

NOW FROM 1 July 2017
PRE TAX CONTRIBUTIONS
Contribution cap of $30,000 a year; $35,000 if you are 50 or over Cap of $25,000 a year for everyone
Use annual cap or lose it Catch-up contributions from July 1, 2018 on rolling 5 years basis for those with balances less than $500,000
15% tax on contributions if you earn less than $300,000; 30% if you earn more 30% contributions tax kicks in at $250,000
Tax deduction for personal contributions for those earning less than 10% of their income from employment Tax deduction for personal contributions for everyone
Voluntary contributions not allowed if you are 65 or more and not working Voluntary contributions not allowed if you are 65 or more and not working
Low income super contribution – refund of contributions tax for those earning up to $37,000 Low income super tax offset – effectively a refund of contributions tax for those earning up to $37,000
AFTER TAX CONTRIBUTIONS
Contributions cap of $180,000 a year Contributions cap of $100,000 if your total super balance is less than $1.6m
“Bring forward” rule allows 3 years of contributions to be made in one year if under 65 (ie $540,000) “Bring forward” period of 2 or 3 years (ie $300,000) depending on your super balance
Additional CGT cap ($1.415m in 2017) for eligible small business owners Additional CGT cap for eligible small business owners
Tax offset for spouse contributions if spouse earns less than $13,800 Tax offset for spouse contributions if spouse earns less than $40,000
PENSION PHASE
No limit on how much can be moved into pension phase Transfer limit of $1.6m
Fund earnings tax free and pension payments tax free from age 60 Fund earnings tax free and pension payments tax free from age 60
TRANSITION PENSIONS
Fund earnings tax free and pension payments tax free from age 60 Fund earnings tax at 15% and pension payments tax free from age 60
SUPER DEATH BENEFITS
Anti-detriment payment (refund of contributions tax paid by the deceased) may be paid on death Anti-detriment payment abolished unless member dies before 1 July 2017 and payment made before 1 July 2019

This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.