With superannuation being a moving feast it can be hard to keep up and know how you are affected. At CLY Financial Planning Melbourne, our experienced financial planners in Melbourne can help you to understand these changes in relation to your personal circumstances and help you understand what opportunities this may present.
What are the changes?
The lifetime contribution cap has been abolished
In the May 2016 Budget, the Government proposed the introduction of a $500,000 lifetime cap on non-concessional (after-tax) contributions to superannuation.
What has changed?
This lifetime cap of $500,000 has been replaced by these proposed changes, starting 1 July 2017:
- a non-concessional contributions cap of $100,000 per year
- individuals under 65 as at 1 July each year can ‘bring forward’ three years of non-concessional contributions
- individuals with over $1.6 million in super can no longer make non-concessional contributions.
These proposals won’t take effect until 1 July 2017, so the existing non-concessional contributions caps will continue to apply for the current 2016-17 financial year:
The work test will now continue from age 65
In the May 2016 Budget, the Government announced it was removing the work test for contributions made on or after an individual’s 65th birthday. This would have allowed individuals over age 65 to contribute to super without having to be gainfully employed for at least 40 hours over a consecutive 30-day period.
What has changed?
This change has been abandoned and so individuals looking to contribute to super from age 65 will still need to satisfy the work test, so the current rules will continue to apply.
The ‘catch-up’ of concessional contributions will be delayed
In the May 2016 Budget, the Government announced that from 1 July 2017, the Government proposed to reduce the cap on concessional contributions (such as employer and salary sacrifice
contributions) to $25,000, and then allow individuals to ‘catch-up’ on any unused concessional contributions within the next five years, if their superannuation balance was less than $500,000.
What has changed?
While the reduced concessional contributions cap is still proposed to apply from 1 July 2017, the ability to ‘catch-up’ on any unused concessional contributions has been delayed until 1 July 2018.
Victoria State Library
Do you have a question?
Despite this new round of changes, superannuation remains a very tax-effective way for you to build up your retirement savings. However, these proposals need to successfully pass through Parliament before becoming law and may be subject to further change during this process. For more information on how these changes could affect you, contact our Financial Advisor Melbourne from CLY Financial Planning today.
Disclaimer: The information (including taxation) is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product.