Finally, the proposed super reforms have gone through with many changes to take place from July 2017.
One of these well publicised reforms is a change to the Non-Concessional Contribution (NCC) cap, which is to be reduced to $100k p.a. (previously $180k).
However, there are further changes to the NCC affecting those of you lucky enough to have $1.6m in super, or those who hope to attain those lofty heights in the medium to near term, which have had less press.
As an aside, to maintain reading interest & due to popular request, this is our fairly recent new family member (the horse not the child) which seems to be somewhat reducing our capacity for NCC’s, at least in the short term. He is lots of fun though, especially when I get to ride him while short-thing is at school, and then send her a selfie to really rub it in!
Anyway back to the point….
After 1 July 2017, if you have a total of more than $1.6m in super (whether in pension, transition to retirement pension, or super) you will not be allowed to put any NCC’s into super at all. That’s none whatsoever. Nil. Only the $25k concessional contributions will be allowed (eg SGC, salary sacrifice and personal deductible).
You may ask, why would I want to put more in super as earnings on balances over $1.6m will be taxed? This is quite correct, but the earnings will be taxed at a mere 15% on income and 10% on most capital gains, so it is not that bad really. Additionally if your superfund is invested in Australian shares, it will still receive the 30% franking credits which reduce (or possibly eliminate) any tax due.
The good news is that the old rules still apply until 30 June 2017, therefore assuming you have not triggered the bring forward caps in the last two years (in which case there are transitional rules), this is a last opportunity for those near or over the $1.6m cap and under age 65 (or over age 65 and passing the work test), to pop an additional $540k into super as a tax free NCC.
If you think this might be relevant please call to discuss your situation in more detail.
Lindsay 02 8090 4112