Government releases more superannuation legislation
On 27 September 2016 the Government released another round of draft legislation implementing a number of the changes to superannuation it announced in the 2016 Federal Budget.
Many of these changes will apply from 1 July 2017 so it might be sensible to for you to start thinking of how your superannuation will be impacted by the changes now and whether you might need to change any of your SMSF’s arrangements.
“The Government’s release of additional superannuation legislation signals significant changes ahead for retirement planning from 1 July 2017.”
Included in the latest legislation were amendments relating to:
- Implementing the Government’s $1.6 million transfer balance cap, which places a limit on the amount an individual can hold in the tax-free retirement phase from 1 July 2017.
- Lowering the concessional contributions cap to $25,000 per year for all taxpayers from 1 July 2017.
- Reducing the income threshold at which individuals are required to pay an additional 15 per cent contributions tax, from $300,000 per year to $250,000.
- Providing greater flexibility for those with broken work patterns by allowing individuals with balances of less than $500,000 to ‘carry forward’ unused concessional cap space for up to five years.
- Removing the tax-free treatment of assets that support a transition to retirement income stream.
Some of these changes may require you to adjust your investment, contribution, pension and estate planning strategies going forward. This will most likely be the case if you have a superannuation balance of over or close to $1.6 million, were planning on making significant contributions to superannuation in the next few years, are a high income earner or have a transition to retirement pension in place now.
How can we help?
If you are concerned that the Government’s changes to superannuation are going to affect you, please feel free to call 9984 7774 to arrange a time to meet so that we can discuss your particular requirements in more detail.
Martin van der Saag martinv@northadvisory.com.au
Cayle Petritsch caylep@nac.com.au
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
Transfer Balance Cap Was Legislated
A lifetime limit on the amount of super that can be transferred into the tax-free retirement phase was introduced.
Contribution Rules Tightened
The concessional super contribution cap was lowered, affecting how much can be contributed before tax each year.
Tax Thresholds for High Earners Changed
The income level at which additional tax applies to contributions was lowered, increasing the likelihood of higher-income individuals paying more tax.
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Frequently Asked Questions
What was the purpose of the Government’s additional superannuation legislation released in 2016?
The legislation aimed to implement changes announced in the 2016 Federal Budget affecting contribution caps, tax thresholds and retirement income rules.
When did these super changes begin to apply?
Most of the changes were designed to apply from 1 July 2017 onwards.
What is the transfer balance cap introduced in the legislation?
The transfer balance cap limits the amount you can hold in the tax-free retirement phase to $1.6 million.
Were the contribution caps affected by the new legislation?
Yes. The concessional (before-tax) contribution cap was reduced to $25,000 per year for all taxpayers.
Did the legislation affect super tax thresholds for high-income earners?
Yes. The income threshold for paying an additional 15% contributions tax was reduced from $300,000 to $250,000.
Why is the Government releasing multiple rounds of super legislation?
Because these reforms are being implemented through draft legislation in stages, and each release adds more detail about how the proposed super changes will actually operate.
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