September super announcements – what is changing?
The major amendments to the Government’s super reforms, announced on 15 September 2016, are summarised here.
Feature
Replace the proposed $500,000 lifetime cap on non-concessional contributions with lower annual caps for non-concessional contributions – and only allow members with superannuation balances less than $1.6m to make non-concessional contributions.
How will it work?
- From 1 July 2017, the Government will lower the annual non-concessional contributions cap to $100,000, which is four times the annual concessional contribution cap. The three year bring forward amount will be reduced to $300,000 (three times the annual non-concessional cap) for individuals under 65.
- The $1.6 million eligibility threshold will be based on an individual’s balance as at 30 June the previous year. If the member’s balance at the start of the financial year (the contribution year) is more than $1.6 million, they will not be able to make any further non concessional contributions.
- Individuals with balances close to $1.6 million will only be able to bring-forward the annual cap amount for the number of years that would take their balance to $1.6m.
- Where an individual has not fully used their non concessional bring-forward before 1 July 2017, the remaining bring-forward amount will be reassessed on 1 July 2017 to reflect the new annual caps.
Feature
Defer commencement of carry-forward arrangements for concessional contributions.
How will it work?
- The proposed start date for this measure has now been pushed back 12 months to 1 July 2018.
- From 1 July 2018, the Government will help people ‘catch up’ their superannuation contributions by allowing individuals with account balances of $500,000 or less to rollover their unused concessional caps (for up to 5 years) to use if they have the capacity and choose to do so.
Feature
Retain the work test for members aged 65 to 74.
How will it work?
To view the article in full and read SuperConcepts’ opinions on the changes, click here.
- As per the current rules, individuals aged between 65 and 74 will only be eligible to make personal super contributions if they meet the work test (that is, they work 40 hours within a 30 consecutive day period in the financial year the contribution is made).
- As per the current rules, spouse contributions will only be permitted if the spouse receiving the contribution is under age 70, and if aged between 65 to 69 they and meet the work test.
- No changes have been announced to the other superannuation reforms announced as part of the 2016 Federal Budget. These reforms, including the proposed introduction of a $1.6m transfer balance cap and removing the tax exempt status of income from assets supporting a transition to retirement income stream, remain as originally announced.
For more information on these changes or Pension changes taking effect from the 1 January 2017, contact Liberum Financial today on 07 3233 6470
Liberum Financial and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 Australia Credit Licence No 357306 trading as Fortnum Financial Advisers.
The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only – unless otherwise stated. Dobbrick Financial Services strongly suggests that you should not act on it without first obtaining professional advice specific to your circumstances.
This article has been reproduced with permission from AMP. For original source, disclaimers, author information and credits:- http://www.ampcapital.com.au/smsf-suite/articles/2016/september/summary-of-september-super-announements?utm_medium=email&utm_source=ampc&utm_campaign=smsf-news&utm_content=article3-headline
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