this product is unavailable for purchase using a firm account, please log in with a personal account to make this purchase.

Select from any of the filters or enter a search term
Calendar
Calendar

Superannuation: Budget targets super concessions

Superannuation: Budget targets super concessions

By Andrew Proebstl

Securities 


Anyone nearing retirement should be aware of the new contribution caps. Significant changes to superannuation were announced on 3 May 2016 in the federal government budget. The key changes include: Reduction in the annual cap on concessional contributions From 1 July 2017 the cap is $25,000 per annum, down from the current $30,000 for those under 50 and $35,000 for those 50 and over. Catch-up concessional superannuation contributions From 1 July 2017 those with balances of $500,000 or less will be able to pay catch-up concessional superannuation contributions, subject to them having unused concessional contribution caps carried forward on a rolling basis for up to five years. Doubling the tax on concessional contributions From 1 July 2017 those with more than $250,000 of income and superannuation contributions (currently $300,000) will pay 30 per cent tax on their concessional contributions, up from 15 per cent. The proposed new 30 per cent rate of tax is still less than the marginal rate of tax for earnings of more than $250,000. Work-test restrictions removed for people aged 65-74 From 1 July 2017 current work-test restrictions will be removed so that all those under 75 can make contributions and/or claim tax deductions for personal superannuation contributions to eligible superannuation funds. Improving access to concessional contributions More Australians will be able to use their concessional contributions cap, with anyone under 75 able to claim an income tax deduction for concessional superannuation contributions to an eligible fund, up to the $25,000 concessional contribution cap. Lifetime non-concessional contributions cap of $500,000 The current annual non-concessional super contribution cap of $180,000 will be replaced by a lifetime cap of $500,000. Effective immediately, the new $500,000 cap will take into account all non-concessional contributions made on or after 1 July 2007. Removal of tax exemption for transition to retirement (TTR) pensions From 1 July 2017 investment earnings of TTR pensions will no longer be tax exempt and will be taxed at up to 15 per cent (as is the case for investment earnings on superannuation assets). This change will apply regardless of when the TTR commenced. $1.6 million superannuation transfer balance to retirement products cap From 1 July 2017 the government will introduce a $1.6 million cap on the total amount of superannuation an individual can transfer into retirement products, which includes superannuation pensions. The cap will be applied to current retirees and those who have yet to enter retirement. Current retirees with more than $1.6 million in retirement products (including superannuation pension) have until 1 July 2017 to either remove the excess or return it to an accumulation superannuation account, where tax of up to 15 per cent applies to investment earnings. Andrew Proebstl is chief executive of legalsuper, Australia’s industry super fund for the legal community.

The content you are trying to access is exclusive to LIV members*

To access your exclusive member content please click the 'Already a Member' button below and you will be redirected automatically.

Not a member but would like to find out about the value of LIV membership? Click the 'Become a Member' button below or call our membership team on (03) 9607 9470.

*Note that some content may be exclusive to specific types of members. If you would like to inquire about your access please contact the membership team on (03) 9607 9470.