Federal Budget 2016 Further Update

Changes passed through Parliament 29 November 2016

Highlight of the major changes effective 1 July 2017

 

Concessional contributions

  • The amount of pre-tax contributions (e.g. superannuation guarantee, salary sacrifice and defined notional contributions) a person can make each financial year will be reduced to $25,000 regardless of their age.

 

Non-concessional contributions

  • The amount of post-tax contributions (e.g. contributions from after-tax salary) a person can make each financial year will be reduced to $100,000 or you may be able to bring-forward up to three years of contributions (e.g. $300,000) depending on your superannuation balance at 30 June (see below).
  • Individuals with superannuation balances of more than $1.6 million will no longer be eligible to make non-concessional contributions.

 

Transition to Retirement Pensions

  • Transition to Retirement pensions will lose the tax-free investment earnings status and will be treated the same as a superannuation account in the accumulation phase. That is, up to 15% tax will apply on investment earnings.

 

$1.6 million pension cap

  • The amount that can be held in the tax-free environment of an account-based pension will be limited to $1.6 million. Amounts held above $1.6 million after 30 June 2017 will need to be transferred back into the superannuation accumulation phase or withdrawn, otherwise penalties will apply.
  • Defined benefit lifetime pensions with annual income of $100,000 or more will have used their whole $1.6 million transfer cap. For those members over age 60, with income in excess of $100,000 will have 50% of this excess amount assessed for tax purposes.
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