Further Changes to the Proposed Super Reforms

Today the Treasurer has announced changes to 2016 Budget super reforms. These are not yet legislated and could of course change again, however it is a start;

The changes to the proposals are:

  • The $500,000 lifetime cap for non-concessional contributions (NCCs) will be replaced with an annual $100,000 non-concessional contributions cap. So they have removed the retrospective nature of the proposed change, and the upper cap on lifetime contributions in part.
  • The current NCC cap carry forward provisions will continue for those under age 65, allowing members to contribute up to $300,000 of NCCs over a 3 year period. Those with accumulation balances over $1.6 million will no longer be able to make non-concessional contributions. The measures above are intended to be effective 1 July 2017.
  • The proposed carry forward of unused concessional contributions cap amounts will remain, however commencement will be delayed until 1 July 2018.
  • The work test for those aged 65 to 75 will remain – this is a shame.

The following proposed Budget reforms will remain:

  • Removing the less than 10 per cent employment income test for personal superannuation contribution deductions. Great news.
  • The $1.6 million transfer cap for benefits transferred to pension phase.
  • Reducing the annual income threshold for Division 293 tax on concessional contributions to $250,000. A real shame as many more will get caught by this extra tax.
  • Reducing the concessional contributions cap to $25,000 pa and allowing a carry forward of unused cap amounts for up to 5 years where account balances are under $500,000.
  • Income on assets backing transition to retirement income streams will be taxed at 15 per cent.
  • The increase to the spouse income threshold for claiming a tax offset for spouse contributions.
  • Continuing the Low Income Superannuation Tax Offset.

 

I will keep you all updated with any further changes as they occur

Lindsay

 

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