Super Gets a Make Over Again
Written on the 31 October 2016 by Arrow
Just when those saving for retirement thought the rules couldn't get any more complex, the Turnbull Government has revised some of the key elements
of the controversial superannuation reforms it announced in the May 2016 Federal Budget.
ensure they are swimming between the new flags from 1 July 2017.
New $1.6 million limit on tax-free super
Earnings on that balance will not be capped, but any savings above $1.6 million must remain in an accumulation account (where earnings are taxed at 15 per cent), or
be moved out of the super system to avoid penalty taxes.
Cut to concessional contribution limits
From 1 July 2017, the annual cap on concessional contributions will be a flat $25,000 (indexed). This is down from the current limits of $30,000 for those aged under 50 and $35,000 for those aged 50 and over.
High income earners will also need to watch the new lower $250,000 income threshold, as their concessional contributions become taxable at 30 per cent, compared to 15 per cent normally.
Lower annual non-concessional (after-tax) contributions cap
Individuals aged under 65 will still be eligible to bring forward three years of non-concessional contributions, while those aged between 65 and 74 can now make non-concessional contributions if they meet a work test.
To help pay for replacing the $500,000 lifetime limit with a lower $100,000 annual cap, individuals with a super balance of over $1.6 million will be ineligible to make non-concessional contributions.
Tax deductions for personal contributions
From 1 July 2017, individuals aged under 65 and those aged 65 to 74 who meet a work test will be able to claim a tax deduction.
Catch-up contributions delayed
Under the new rule, people with account balances below $500,000 will be able to rollover any unused concessional caps for up to five years.
New benefit for low income earners
The LISTO will be a refund (up to $500) of the concessional contributions tax paid by individuals with income under $37,000.
Spouse tax offset expanded
Transition-to-retirement (TTR) pensions wound back
From 1 July 2017, this income will be taxed at 15 per cent and certain income stream payments will no longer be counted as lump sums for tax purposes. limit rising to $40,000.
The rules governing Australia's super system are complex and with the many changes being passed through legislation it's challenging to stay up to date and ensure
that your retirement planning takes into account these changes.If you would like more information or just to chat about how super can be used to build your retirement nest egg, please speak with us , a Gold Coast Financial Planner , contact our office today.