Late last year a number of superannuation changes passed parliament and take effect from 1 July 2017. These changes are likely to significantly impact a number of our clients, particularly;
- Individuals in Transition-to-Retirement,
- Retirees with more than $1.6 million in superannuation already,
- Individuals under 65, with significant assets outside superannuation who have not triggered the 3-year NCC bring-forward rule in the last 2 years,
- High-income earners with close to $1 million in superannuation,
- High-income earners who are currently salary sacrificing into superannuation.
The major changes include:
- Introduction of a transfer balance cap: A $1.6 million cap has been introduced on the amount that can be transferred to super in retirement phase when earnings are tax-free. This relates to superannuation for people who have already retired. For individuals not yet retired, after 1 July, once your superannuation balance reaches $1.6 million you will not be able to make any more non-concessional contributions to superannuation. However, you can build your super balance greater than $1.6 million before 1 July. More information in Kate O’Brien’s article.
- Non-concessional contributions cap reduced and criteria introduced: The annual non-concessional contributions cap has been reduced from $180,000 to $100,000. More information in Kate O’Brien’s article.
- Concessional superannuation contributions cap reduced: The annual concessional contributions cap has been reduced to $25,000 (from $30,000 for those aged under 49 at the end of the previous financial year and $35,000 otherwise). For high-income earners who are currently salary sacrificing into superannuation, you will probably be affected by this cap. In the next few months, you may need to maximise your salary sacrifice contributions before the end of the financial year, and adjust your salary sacrificing arrangement from July 1 to ensure the reduced cap is not exceeded.
- Concessional superannuation contributions tax threshold reduced: The threshold at which high-income earners pay Division 293 tax on their concessionally taxed contributions to superannuation has been reduced from $300,000 to $250,000. Again, this is likely to affect high-income earners who are currently salary sacrificing into superannuation.
Are You Affected?
If you are concerned about the upcoming changes, or have any queries, please contact us to discuss further on (02) 9908 9888.
We would also encourage you to make contact with your financial adviser or superannuation fund to ensure you are not missing out on opportunities to grow your superannuation in the next four months.