Superannuation changes taking effect from 1 July, 2017
Introduction of a $1.6 million transfer balance cap
This cap will be applied to both those yet to enter retirement phase, and those already in retirement phase. This cap will be indexed.
This means that for those currently in pension mode, any balance above the 1.6 million cap will need to either be withdrawn from the fund or reverted back into accumulation phase and once again subject to 15% tax on earnings.
Removal of tax exemption for transition-to-retirement pensions (TRIPs)
This was a surprising announcement and will impact many of you who are currently using TRIP's as a tax saving strategy. It may be more beneficial for some of you currently operating as a TRIP to convert back to accumulation phase until retirement. Should you have concerns regarding this, please speak to us.
Cut in annual concessional (before-tax) contributions cap to $25,000
This cap is effective across the board, there will no longer be a higher cap for those aged over 50.
Introduction of catch-up concessional contributions over 5-year period (from July 2018)
This new regime means that unused portions of the concessional cap each year can be carried forward on a rolling basis for up to 5 years, for the annual caps applicable from July 2018.
IMPORTANT: Only applicable if you have an account balance of under $500,000.
Cut in annual non-concessional (after-tax) contributions cap to $100,000
The government have scrapped their original plan of the $500,000 lifetime limit on non-concessional contributions and instead introduced an annual contribution limit of $100,000.
This new limit means the 3 year bring forward rule will have a total contributions cap of $300,000 from 1 July, 2017.
Under the new rule, you may also only make non concessional contributions if you have a total superannuation balance of under $1.6 million.
Continuation of the Low Income Super Contribution (super tax refund)
This offset gives individuals on an adjusted taxable income of $37,000 or less, a refund of contributions tax paid on concessional contributions up to a limit of $500. This amount is paid into the superannuation fund.
Increase in income threshold for spouse superannuation tax offset to $37,000
The income threshold for the spouse superannuation tax offset is increasing from $10,800 to $37,000 and will phase out of $40,000.
The offset is still worth $540 for the eligible spouse.
Tax hike for more Australians: 30% tax on concessional (before-tax) super contributions
The income threshold for concessional contributions will be lowered from $300,000 to $250,000 which means more taxpayers will be hit with the extra contributions tax.
This means more people will be hit with an additional 15% tax rate on concessional contributions on top of the current 15%.
The initial 15% contributions tax is collected when the contribution is made into the super fund.
The additional contributions tax bill is issued once the taxpayer has submitted their individual income tax return and can be arranged to be paid from the superannuation fund or your own private savings.
Expansion of tax-deductible super contributions to all Australians
All taxpayers under the age of 75 will be allowed to claim a tax deductions for personal concessional super contributions.
This previously only applied to taxpayers whose salary and wage income was less than 10% of their entire taxable income.
Removal of option to treat a pension payment as a lump sum payment, for tax purposes
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