Important Notice: Government Announces Significant Super Changes
Written and accurate as at: Sep 15, 2016 Current Stats & Facts
On 15 September 2016 the Australian Government announced some significant changes to the superannuation proposals previously announced on Budget night.
Firstly, and most importantly, at the time of writing this the annoucements had not yet been legislated and no draft has been released on these measures. Given these announcements are not yet law it is essential in determining how the new measures will truly operate. The Government has indicated that legislation is expected to be introduced into Parliament before the end of 2016.
The following important changes have been announced:
- The proposed lifetime cap of $500,000 per person for non-concessional contributions will not go ahead.
- From 1 July 2017, only those with a superannuation account balance below $1.6 million (assessed as at the previous 30 June) will be able to make non concessional contributions.
- If you are eligible to make non-concessional contributions from 1 July 2017, they will be limited to $100,000 per annum (although the bring forward rules will continue).
- The Government will retain the existing requirement that you must meet a work test to be able to contribute to super between ages 65 and 74 (they had originally proposed to remove this requirement).
- There are no changes to the proposals around concessional contributions (including lowering the limit to $25,000) other than delaying the “catch-up” opportunity for those with less than $500,000 in super by 12 months to a 1 July 2018 commencement.
These announcements may present a real opportunity to boost your superannuation balance. Whilst we await (draft) legislation to confirm the exact mechanics of these announcements, the following opportunities may arise before 1 July 2017 should these announcements become law:
- If you thought, you would not be able to make any more non-concessional contributions (having already exceeded $500,000 in non-concessional contributions since 1 July 2007) you may be able to make some additional contributions.
- If you have a superannuation balance in excess of $1.6 million you may have a one-off opportunity this year to contribute this financial year as the $1.6 million cut off only applies for contributions from 1 July 2017.
- If you are under age 65 and have not yet triggered the bring-forward rules, you may be able to do so this year and contribute up to $540,000 this financial year.
And from 1 July 2017, based on the current information available, if you have less than $1.6 million in super as at the prior 30 June, but have more than $1.5 million, you could still contribute a full $100,000 as a non-concessional contribution (not just the shortfall to the $1.6 million total).
As mentioned some of these changes may result in the opportunity to make additional contributions to super, particularly before the new proposals take effect on 1 July 2017. However, in the absence of legislation to give effect to these measures, we highly recommend you seek advice before acting.
Please contact Integral Private Wealth on 1300 468 694 or via email on info@integralprivatewealth.com.au should you wish to know more or how this may impact your own circumstance.