The Government has implemented several superannuation reforms announced in the 2016 Federal Budget. It is important to become familiar with the changes and determine how they affect each client. Changes include:
- a reduction in both the concessional contributions cap and non–concessional contribution,
- the introduction of a Pension Transfer Balance Cap limiting tax-free earnings in the pension phase to $1.6 million
- $500K lifetime Non Concessional Contributions (NCC) Cap has been dropped.
- The Government has instead announced a reduction of the current annual NCC Cap from $180K to $100K from 1 July 2017. This will mean your clients can continue to contribute NCCs of up to $180K, and use the bring forward to $540K this financial year. The 3-year bring forward provisions will remain as per the current provisions based on the lower cap. No NCC contributions will be allowed once the proposed $1.6Million transfer cap has been reached.
- The reduction to a $25K CC cap will remain in place and commence from 1 July 2017.
- The concessional contribution catch up provisions have been delayed and will now not commence until the 2019/2020 financial year.
- The Government has confirmed that Division 293 tax on Super will be reduced to individuals with salaries above $250,000 p.a.
- The government has changed their mind on the removal of the work test for those aged over 65.
The FPA has been actively advocating on behalf of members for changes to the Federal Budget measures and welcomes the removal of the planned retrospective $500,000 lifetime non-concessional cap.
Super reforms at a glance
Read Government announcement about changes to the Budget measures
Annual NCC cap
View our updated superannuation policy comparison table
We are always keen to hear your valuable feedback and suggestions. Please let us know if there are any policy issues or concerns that affect you.