The government’s annual Budget was delivered on 3 May 2016. This year’s Budget contained a number of proposals that will impact on super and retirement incomes, with most measures expected to apply from 1 July 2017.
A number of amendments were subsequently made to these Budget proposals by the government in September 2016. We have outlined the original proposals and the changes to the super related measures below:
- Reducing the concessional contribution cap for employer and before-tax contributions to $25,000 per annum.
- Allowing those with a super balance of less than $500,000 to make catch-up concessional contributions.Proposed change: the start date of this measure will be pushed back to 1 July 2018.
- Replacing the annual non-concessional (personal, after-tax) contribution cap with a $500,000 lifetime cap.Proposed change: This measure will be scrapped and replaced with a proposal to reduce the existing annual non-concessional contribution cap from $180,000 to $100,000.
- Introducing a $1.6 million balance cap on super that can be transferred to pension phase.Proposed change: In addition, people with a super balance of more than $1.6 million will not be able to make non-concessional (after-tax personal) contributions from 1 July 2017.
- Removing the tax exemption on transition to retirement pension investment earnings.
- Removing the work test requirements that apply for those aged 65 – 74 to make contributions to super.Proposed change: this proposal will not proceed – the current work test requirements will remain.
- Replacing the Low Income Superannuation Contribution with a Low Income Superannuation Tax Offset to reduce tax on super contributions for low income earners.
- Removing the employment criteria for allowing people to claim a tax deduction for personal super contributions.
- Increasing the income threshold for the spouse superannuation tax offset.
- Abolishing anti-detriment payments payable as part of a death benefit paid to eligible beneficiaries.
This document contains general information only and has been prepared without taking into account your financial objectives, situation or needs. It may, therefore, not be right for you. Before you make any investment decision, we suggest you consult NSF Super’s Product Disclosure Statement and/or seek licensed financial advice.
As at the time of compilation, the information contained in this document is correct and any estimates, opinions, conclusions or recommendations are reasonably held or made. Subsequent events may mean that the information becomes out-of-date and so, to the maximum extent permitted by law, we disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document.
Please note that this summary is not an exhaustive list of Federal Budget announcements and that all announcements are proposals only and are not yet law as at the time this article was prepared.