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Super rates and thresholds for 2016/17

The Australian Taxation Office (ATO) has released the key superannuation rates and thresholds for the 2016/17 financial year.

  • Concessional contributions cap – the cap will remain at $30,000 for the 2016/17 year. A higher cap of $35,000 applies to those aged 49 years or over on 30 June 2016.

Concessional contributions are contributions that you or your employer make to your super with before-tax income or claim as a tax deduction. They are also referred to as employer or before-tax contributions.

  • Non-concessional contributions cap – the cap for 2016/17 will remain at $180,000. Under the bring-forward rules, the cap over a three year period is $540,000.

Non-concessional contributions are contributions you or your spouse make to your super from your after-tax income. They are also referred to as personal or after-tax voluntary contributions.

As part of the 2016 Federal Budget, the government has proposed replacing the current annual non-concessional contribution cap with a $500,000 lifetime non-concessional contribution cap. If legislated, this measure would apply from 7:30pm 3 May 2016 (Budget night). The lifetime cap is proposed to include all non-concessional contributions made from 1 July 2007, however contributions made prior to Budget night will not result in an excess. This announcement is a proposal only and is not yet law as at the time this article was prepared.
  • Superannuation Guarantee (SG) – the SG rate remains at 9.50%, with the maximum super contribution base for 2016/17 increasing to $51,620 per quarter.

SG contributions are the compulsory contributions which most employees are eligible to receive, paid by their employer to super on their behalf.

  • Superannuation co-contribution – the maximum co-contribution entitlement for the 2016/17 year remains at $500. The lower income threshold (for full entitlement) increases to $36,021 and the higher income threshold (cut-off for eligibility) increases to $51,021.

The super co-contribution is designed to help lower income earners save for their retirement by providing a government top-up where an eligible person makes a personal contribution to super.

  • Superannuation benefits caps – the low rate cap amount for 2016/17 remains at $195,000.

The low rate cap is the amount that is able to be withdrawn tax-free over a lifetime for people that have reached their preservation age (see below), but are not yet 60 (when super withdrawals become entirely tax-free) – please note other eligibility criteria apply for making a withdrawal.

  • Preservation age – to meet preservation age during 2016/17, your date of birth must be 30 June 1961 or earlier.

Super is preserved for your retirement and has government-placed restrictions on when it can be accessed. Some conditions for accessing super rely on a person firstly reaching their preservation age.

  • Capital Gains Tax (CGT) cap amount – the CGT cap amount for 2016/17 increases to $1,415,000.

The CGT cap is the lifetime super contribution limit for proceeds from the disposal of eligible small business assets.