Superannuation Changes: Their impact on you.
Posted on Monday, December 12th, 2016
In November 2016, the federal government succeeded in passing changes to our superannuation laws, claiming it will save almost $3 billion and future proof the superannuation system for decades to come.
The changes were first proposed in the 2016/2017 Federal Budget in May 2016. The superannuation bill, the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016, was passed in November 2016 and contains several amendments.
Most of the amendments will come into effect on 1 July 2017, so there’s plenty of time to understand how you could be affected and consult a Camori Investments superannuation specialist to make the necessary changes before then.
The key changes to be aware of are:
Money into super:
- Reducing the concessional contributions cap to $25,000 for all taxpayers.
- Introducing a concessional contributions catch-up regime for those with total super balances of less than $500,000 from 1 July 2018. This will allow you to increase your contributions in the current year, above the maximum, by allocating to prior years.
- Allowing a deduction for personal contributions without testing the proportion of employment income received. This means that at the end of the year, you may be able to contribute under certain circumstances and claim a tax deduction.
- Reducing the non-concessional contribution cap to $100,000 pa (from the current $180,000 pa)
- Introducing a low-income superannuation tax offset to replace the low income superannuation contribution (which will be abolished from 1 July 2017), ensuring that low income earners aren’t disadvantaged by putting money into super.
- Increasing the annual income threshold from $10,800 to $37,000 for eligibility for the spouse contribution tax offset.
- Removing tax exempt earnings for transition to retirement income streams.
- Lowering the income threshold for Division 293 tax to $250,000.
Money out of super:
- Introducing a $1.6 million cap which limits the amount that can be transferred to the retirement phase, where earnings are tax-free. This measure will also apply to death benefit income streams and is estimated to impact 2% of the population.
Planning for your retirement shouldn’t be confusing or complicated.
This round of changes could have an impact on your superannuation and future retirement. Although these changes don’t come into effect until 1 July 2017, now is the time to act. Contact a Camori Investments Superannuation specialist today.