Government announces changes to super
15 September 2016
Yesterday, Treasurer Scott Morrison announced significant changes to the proposed superannuation reforms announced at the May budget.
The government have scrapped the proposed $500,000 limit on after-tax contributions which will be replaced by an annual non-concessional $100,000 limit.
That means workers will be able to put up to $100,000 a year to top up their superannuation from after tax income until their superannuation reaches a limit of $1.6 million.
Below are the key proposals:
- The $500,000 lifetime Non Concessional Contributions (NCC) Cap has been dropped.
- The Government has instead announced a reduction of the current annual NCC Cap from $180,000 to $100,000 from 1 July 2017. This means you can continue to contribute NCCs of up to $180,000, and use the bring forward to $540,000 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 $1.6 million transfer cap has been reached.
- The reduction to a $25,000 NCC 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.
Whilst Mr Morrison expects Labor will support the revised superannuation package, it is important to note this isn’t legislation.
For further information or to find out how this may affect you, speak with your local Boyce accountant.
Source: Financial Planning Association of Australia Ltd